Posted by: Melissa Pennuto
The economic crisis facing many Americans is growing a new set of horns as it continues to take on our most fragile demographic: Seniors. The amount of student loan debt held by Americans age 60 and older rapidly increased from $6 billion in 2004 when it affected less than 1% of that population, to $58 billion in 2014 and affecting more than 4%. With more than half of the loans held by those 75 and over in default, the cost of education and the student loan debt crisis is hitting seniors in the ribs by garnishing their Social Security payments in order to pay student loans.
Seventy-eight percent (78%) of senior student loan debt is for their personal education. Between job losses and investment & retirement accounts being cut in half due to the financial crisis of the past ten years, many older adults have gone back to school, hoping to better their lives and the lives of their children. With the cost of education on the rise for all students, older adults are hit the hardest with less time to make their payments.
Their intent of increasing their wages by furthering their education and working longer into their lifetimes is significantly burdened with student loan payments, and even with the popular 25 year income-based repayment plans, if seniors are unable to pay their loans in full within the 25 years, or if they die before they are paid in full, seniors (or their estates) are hit with a major income tax burden.
Unfortunately, student loan debt is not dischargeable due to a mere inability to pay.
If you are faced with a question of whether you should go back to school, please consult with your financial advisor prior to making the leap.