Unmanageable student loan debt is a common problem, with nearly one in 10 borrowers defaulting within two years, according to the U.S. Department of Education. Now student loan debt is increasingly interfering with the retirement plans of older adults as well.
According to the New York Times, people age 60 and older now comprise the fastest growing age group for student loan debt. More older adults are borrowing, and a larger percentage of the borrowers are defaulting.
Some older Americans took out loans to pay for their children’s college expenses, and some are in debt from their own education costs. The ratio is unknown because there is no government system to track that information.
A particular concern for retirees is that the federal government will take up to 15 percent of Social Security payments and apply it to unpaid loans, although this does not affect recipients who collect less than $750 per month.
The total outstanding student loan debt in the United States has reached a remarkable $1 trillion, and with unemployment still high, many people of all ages have been unable to pay back their loans. Even people who are able to pay back loans may find that their retirement is affected, because high payments make it more difficult to save for retirement.
One legislative reform that has been proposed is to allow private student loans (but not government-sponsored loans) to be dischargeable in bankruptcy.