Elderly People Struggling With Thousands of Dollars in Student Loan Debt
An elderly man unrelated to student loans.
The face of student loan debt is changing and now includes countless senior citizens who are tasked with paying back tens of thousands of dollars.
That’s the case with Ken Stumpf, a 70-year-old from Colorado, who along with his 65-year-old wife owes close to $180,000 in combined student loan debt. Stumpf told the Atlantic Journal Constitution that both of them will be paying off the loans until they die.
A new report from the Consumer Financial Protection Bureau underscores just how bad the problem is. The government watchdog found that among consumers 60 and older, student loan debt has quadrupled over the least ten years, with the amount they owe increasing at a dramatic rate.
The CFPB estimates that older consumers owed an eye opening $66.7 billion in student loans in 2015 alone, becoming the fastest growing segment of the student loan market. Back in 2005, there were around 700,000 student loan borrowers over the age of 60. That number has jumped to 2.8 million as of a result of the ever rising costs of a college education. Additionally, in 2005 the CFPB found that people 60 and older owed around $12,100, on average. In 2015 that almost doubled to $23,500.
Paying off student loans, regardless of the age of the borrower, can often be difficult. Elderly people, though, are in a unique situation in that they often owe money at a time when their cash flow and income is shrinking as they head into retirement.
In addition to less money to cover monthly expenses, seniors are at the stage where they are drawing down on their retirement savings and dealing with healthcare costs that often rise with age.
According to Fidelity Investments the average healthy couple will spend $260,000 on healthcare in retirement. And, that doesn’t take into account any unexpected illnesses, stints in long term care facilities, or the need for round the clock care. Add student loans into the mix and it’s understandable that lots of older borrowers are struggling.
It also doesn’t help that the options to get out from under debt are limited the older you get. While income-driven repayment plans are a way to lower monthly student loan bills, seniors often find them confusing and never apply. Even when they do successfully apply, servicers often intentionally delay enrolling borrowers in these programs.
The impact of the debt is also greater for borrowers 60 and older. The CFPB found the number of delinquent student loans held by older borrowers jumped to 12.5 percent in 2012 from 7.4 percent in 2005. Even worse, close to 40 percent of borrowers of federal student loans over the age of 65 are in default.
Image Copyright Luca.