Student loans are making retirement difficult for Baby Boomers
Student debt is growing faster among older Americans than among any other age group.
Older Americans have a lot of concerns when it comes to saving for retirement, but student debt is not traditionally thought of as one of them. However, a recent report by the Consumer Financial Protection Bureau (CFPB) is showing how student debt is becoming a major problem for those who are preparing for or are already in retirement. According to MarketWatch, that report shows that student debt is growing among older Americans faster than it is among any other age group. The number of older Americans who are seeing their Social Security benefits used to offset student debt has also mushroomed in recent years.
Baby Boomers and student debt
Baby Boomers and other older Americans are increasingly struggling to pay off student debt. As Forbes reports, 37 percent of student loan borrowers who are 65 or older were in default on those loans in 2015, compared to just 17 percent of student loan borrowers under 49 who were in default. The CFPB report also pointed out that the number of borrowers aged 65 and over whose Social Security benefits were being garnished to pay off student debt increased from 8,700 in 2015 to 40,000 in 2015.
Overall, the number of Americans who are 60 and older who are carrying federal student loans increased dramatically between 2005 and 2015, from 700,000 to 2.8 million. That same age group now accounts for 6.4 percent of all student loan borrowers, up from 2.7 percent in 2005. The average student debt carried by that same age group also now stands at $23,500, up from $12,100 in 2005.
Struggles faced by older borrowers
Older Americans face a number of unique struggles when trying to pay off student debt while also trying to save up for or enjoy their retirement. For one, many older borrowers have complained to the CFPB of loan servicers not negotiating fairly in helping them set up an adequate repayment plan. Without such a repayment plan that borrowers can afford, many Americans find themselves dipping into their retirement funds or having their Social Security benefits garnished in order to pay off the debt.
Another unique aspect to the student debt problem among Baby Boomers is that much of the debt was taken out not in order to fund the education of these older Americans, but rather for their children. Parents who cosigned on their children’s student loans often end up being the ones saddled with repayment obligations and strikes against their credit ratings if and when their children cannot afford the loan payments themselves.
Help with debt
Student debt is just one side of the debt crisis that many people in California and across the country are currently facing. Anybody who is struggling with debt, including with student loans, should take to a bankruptcy attorney to find out whether declaring bankruptcy may provide the relief they need to get back on their feet.