They probably expect to be using their savings to give them a comfortable retirement, however, an increasing number of seniors are repaying student debt. In fact, the number of older American’s paying back student debt has quadrupled in the past 10 years. Seniors aged over 60 are now responsible for paying back $66.7 billion in student loan debt, according to the Consumer Financial Protection Bureau. In the U.S., the outstanding student loan debt totals almost $1.4 trillion. It’s estimated that 2.8 million Americans over 60, had outstanding student loans in 2015, up from 700,000 in 2005. Seniors are also taking on larger amounts of student debt. On average, borrowers aged over 60 owe $23,500 in student loans. This is almost double what was owed 10 years before.
Why do so many older Americans have huge student debt?
Many seniors who find themselves saddled with student debt in their older years, took out student loans to support themselves while studying as an older student. About six out of ten people took out their loans while in their 30s and 40s, proving that it’s not always easy to take on thousands in college debt while about to reach their prime working years. This is typically the time when people are raising families and buying homes. But many seniors are also being hit with repaying their children’s or even grandchildren’s student debt. As younger people struggle to become financially independent, their debt passes up the family to their parents or grandparents.
The impact of debt on seniors’ wellbeing
While they should be relaxing in their senior years, many older people struggle to deal with the stress and pressures of outstanding debts. This stress can manifest itself in insomnia, headaches, upset stomachs, low energy and chest pain and rapid heartbeat. Stress has also been associated with teeth grinding, anxiety and forgetfulness in seniors.
Steep rise in college costs
The cost of going to college has hit a record high and subsequently placed a heavy burden on older people. In fact, nearly 40% of student loan borrowers over 65 are in default, the highest rate for any age group. Nearly 75% of borrowers over 60 struggle to keep up with the rising education costs for their child or grandchild. Today, a four-year degree from a private university, costs around $181,480, while attending a public university will cost about $80,360, according to the College Board.
Social Security benefits seized to cover debt
Almost four in 10 borrowers over 65 are in default on student loans, the largest share across all age groups. About 67,300 of over 65s are finding that some of their Social Security benefits are seized to cover unpaid student loans. These benefits are often their only regular income in retirement, forcing an increasing number below the poverty line. In fact, a huge $171 million was taken from Social Security payments from seniors who had defaulted on student loans in 2015.
Seniors don’t expect debt to come to them
Many seniors report that they didn’t expect to be hit with student loan debt. Frequently parents and grandparents agree to co-sign loans, assuming that their child or grandchild will take care of the repayments once they leave school and get a job. But increasingly, that is not the case. In fact, the sad truth is that an increasing number of older Americans die still owing on student loans, with around 13% of over 50s passing away with student loan debt outstanding.