Even American seniors are starting to feel the tightening grip of student loans, a new report from the Government Accountability Office (GAO) says.
The amount of student debt held by those over 65 remains comparatively small — about $18 billion dispersed across 700,000 households, which is just 3 percent of seniors (in comparison, 24 percent of non-seniors have student loans). However, the volume of this debt is growing rapidly. Just eight years ago, seniors had only $2.8 billion in student debt, meaning their debt burden has sextupled in under a decade.
The rapid increase in debt reflects both the soaring cost of college tuition and also the recent recession. Many adults found themselves laid off in the twilight of their careers and turned to education as a possible remedy. For some, that debt is turning into yet another burden that is delaying or outright preventing retirement.
Senior student debt is disconcerting for several reasons. While young adults have their whole lives to pay off their debt and ideally will have acquired higher earning power with their degree, seniors are at the tail end of their working lives and often hoping to retire. In addition, seniors are more likely than young people to carry other kinds of debt such as mortgages.
Unsurprisingly then, the GAO found that seniors are significantly more likely to be in default on their student loans, which is undermining the retirement of thousands of people. Over 150,000 seniors are having Social Security benefits garnished to pay student loan debt, with the amount protected from garnishment insufficient to keep seniors above the poverty line. Student loan debt typically cannot be discharged in bankruptcy, meaning there is no easy way out besides repayment, or death.
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