[With student loan repayments about to restart, more people with
ballooning college debt are aging into retirement ]
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MANY SENIOR CITIZENS EXPECT TO DIE WITH COLLEGE LOAN DEBTS  
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Jon Marcus
September 1, 2023
The Hechinger Report
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_ With student loan repayments about to restart, more people with
ballooning college debt are aging into retirement _

Elderly Americans Have $36 Billion in Student Loan Debt, by Occupy*
Posters ( CC BY-NC-SA 2.0)

 

Marjorie Sener was still in her 20s when she took out a loan for about
$5,000 to get some college credits she hoped would eventually add up
to a bachelor’s degree.

That goal was thwarted when her partner became ill.

“The burden of our living expenses fell on me,” said Sener, who
lives in the Dallas suburbs. “I devoted all of my resources to
keeping our heads above water.”

But while Sener never got her degree, that student loan kept growing,
fattened by compounding interest.

Now, at 74, she owes more than $55,000, or 10 times what she
originally borrowed, and has put off any hope of retiring. Sener still
works, as a legal secretary, juggling her student loan debt with other
expenses, including medical costs from recent cancer treatments.

Some 114,000 Americans have had their Social Security garnished
because they couldn’t make their student loan repayments.

“My payments are as small as I can make them, since I cannot repay
the full amount,” she said. “My financial goals are to be able to
pay my rent, afford my car and medical bills and hopefully be able to
provide for my own funeral expenses.”

She isn’t joking. Sener expects to never get rid of her student loan
obligation.

“The fact is, I’ll never be able to pay the full debt,” she
said. “It’s just something that binds my life.”

And the lives of a rising number of other older Americans.

The number of people age 60 and older who still have student loan debt
has sextupled since 2004, and the amount they owe is up 19-fold, the
think tank New America reports
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there are now 3.5 million of them, who collectively owe more than $125
billion in student loans.

RELATED: ‘AUGUST SURPRISE’: THAT COLLEGE SCHOLARSHIP YOU EARNED
MIGHT NOT COUNT
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This is not, by and large, debt that parents assumed to send their
kids to college. For three-quarters of federal borrowers 65 and older,
it’s money they borrowed for their own educations and have been
paying off for decades the Government Accountability Office, or GAO,
found [[link removed]].

That’s a situation about to get much worse. More people with even
larger student loan debt are aging into retirement just as the Biden
administration’s plan to forgive up to $20,000 of this debt for
recipients with incomes under $125,000 has been blocked by the Supreme
Court and the Covid-19 pause in repayments ends.

“A lot of people think of student debt as being a young people’s
issue. But when you segment the population by age, the people with the
fastest-growing debt are older,” said Thomas Gokey, co-founder of
the activist organization the Debt Collective.

Older Americans who default on student loans can have their Social
Security benefits garnished. That has now happened to at least 114,000
people. Credit: Kevin Dietsch/Getty Images

Many older Americans with student loan debt face retirement with less
money than their classmates who didn’t have to borrow, according to
researchers from the Federal Reserve
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they try to pay off what they owe, they’re at the mercy of a
patchwork of private companies assembled by the Department of
Education to service loans, which often fail to provide information
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payment plans tied to income and other ways to manage the debt.

“They’ve been failed by multiple systems,” said Sarah
Sattelmeyer, New America’s project director for education,
opportunity and mobility. “Our higher education system hasn’t
served them well. And the student loan repayment system also doesn’t
serve them well.”

It’s not that older borrowers with debt don’t want to pay it back.
Many say they simply can’t afford to, New America found
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interviews with focus groups.

The number of people age 60 and older who still have student loan debt
has sextupled since 2004 to 3.5 million, and the amount they owe is up
19-fold to $125 billion.

Older Americans with student loan debt take second jobs, delay
retirement, are less likely to own their own homes and suffer low
credit scores. More than 60 percent say they don’t have enough
savings
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cover their expenses for three months in an emergency, New America
found. Nine percent say their student loan debt has forced them to
forgo medical care
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according to a survey by AARP, formerly the American Association of
Retired Persons.

“This is life and death for people. This is the difference between
being able to pay to eat, to make rent, to pay a mortgage,” Gokey
said.

Even before the pandemic, nearly twice as many older borrowers as
younger borrowers said that they were behind
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repaying their student loans.

That can lead to the most dire consequence for older borrowers: having
their Social Security benefits garnished, which is triggered when a
loan has been delinquent for 270 days. Everything above $750
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a retiree receives each month from Social Security, or 15 percent of
the benefit — whichever is lower — can be withheld and applied to
the debt.

RELATED: ONE COLLEGE FINDS A WAY TO GET STUDENTS TO DEGREES MORE
QUICKLY, SIMPLY AND CHEAPLY
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Some 114,000 Americans [[link removed]] have
had their Social Security garnished because they couldn’t make their
student loan repayments, according to the most recent available
figures.

That drives many older borrowers into poverty,  the GAO
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“Absent the student debt, they might have had a decent income,”
said Gokey. “They didn’t do anything wrong. But they shouldn’t
have had this debt.”

The Supreme Court blocked the Biden administration’s plan to forgive
up to $20,000 of debt for recipients with incomes under $125,000. That
means student loan repayments are coming due again after a pandemic
pause. Credit: Kent Nishimura/Los Angeles Times via Getty Images

Yet even as money from their Social Security benefits is diverted to
repay their loans, some see their balances continue to increase,
thanks to interest, the GAO found
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“People get caught in default as this kind of quicksand,”
Sattelmeyer said.

It isn’t only older Americans with lower incomes who are weighted
down by student loan debt. Carolina Rodriguez, director of the
Education Debt Consumer Assistance Program at the Community Service
Society of New York, said her clients range from people living in
homeless shelters to judges.

“We are at another level of crisis,” she said.

Take Charles Earl. He spent eight years in the 1990s getting a
doctoral degree in computer science at the University of Chicago, from
which he graduated with $70,000 of student loan debt. Now, at 61, he
owes $136,000, and his son is starting college.

“I guess we’ll make it work somehow. I don’t really know how,”
said Earl, who lives in Decatur, Georgia, and works as a software
developer. “We want to make sure he doesn’t have to go through
this. I’ve learned that lesson.”

The University of Chicago, where Charles Earl graduated with a
doctoral degree and $70,000 in student loan debt. Now, at 61, he owes
$136,000. Credit: Beata Zawrzel/NurPhoto via Getty Images

Thanks in large part to his student loan debt, Earl has no immediate
plans to retire, he said. “It’s most likely that I’m going to be
working for the next 10 years and praying that my health holds out.”

Many more Americans appear to be headed for this same fate. The
proportion who have student loan debt continues to increase, with more
borrowers ages 35 to 61 holding debt than those who are 62 and
older, the Boston College Center for Retirement Research estimates
[[link removed]].

“This is becoming potentially a bigger problem,” said Siyan Liu, a
Center for Retirement Research economist.

Biden’s loan-forgiveness plan would have erased the student loan
debt of 20 million Americans and reduced it for another 20 million.
Instead, interest on loan payments will resume Sept. 1 for all loan
holders after the three-year pandemic pause, and the bills will begin
to become due again in October for borrowers of all ages.

 RELATED: IN JAPAN, PLUMMETING UNIVERSITY ENROLLMENT FORECASTS
WHAT’S AHEAD FOR THE U.S.
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“People are already coming to us and saying, ‘We can’t pay
it,’ ” Gokey said.

About one in five borrowers will, in fact, struggle to make their
payments, according to the Consumer Financial Protection Bureau
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A survey of consumers by Morgan Stanley
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the number even higher, at one in three, while nearly four in 10 said
they will need to cut their other expenses to afford their payments.

“I am afraid that among the highest potential for delinquency and
default is going to be this group,” Rodriguez said of older
borrowers.

“I can’t imagine retiring. I will have to work for the rest of my
life.”
Mary Donahue, a 61-year-old student loan holder

There are some ways to escape this, depending on the type of the
original loan, the National Consumer Law Center advises
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Borrowers with Federal Family Education or Perkins loans can
consolidate them into direct loans, then tie the payments to their
income, for example; these so-called income-driven or
income-contingent repayment plans allow the loans to be canceled after
20 or 25 years, depending on the circumstances.

Even that is little consolation to Mary Donahue, a social worker in
private practice in Richmond, Virginia, who has converted her loans
into income-contingent repayment and will have them forgiven in 2037.
She’ll be nearly 76 by then, however, and will have paid $159,033 on
her loans; the principal was about $109,000.

RELATED: SURPRISING PATTERNS IN WHO GETS MERIT AND NEED-BASED AID
FROM COLLEGES
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“It feels very helpless,” said Donahue, now 61. “I can’t
imagine retiring. I will have to work for the rest of my life. The
only positive thing is that my debt will not be left to my
children.”

There are some ways out of this. People who believe they were misled
by recruiters or went to colleges and universities that closed before
they finished a degree can petition for their debt to be forgiven. Or
loan holders can apply for “total and permanent disability”
discharges, a process that has been slightly simplified over the last
few years for veterans and others. A limited program called Fresh
Start, which will be available for one year starting in September,
will give borrowers who defaulted a chance to catch up on their
payments and return their loans to good standing.

There are other consequences to this problem. At a time when college
enrollment is already plummeting, said Sattelmeyer, “something we
heard a lot in our focus groups is that when someone had a negative
experience with their college loans, they were more likely to tell
younger generations that higher education wasn’t worth it.”

_This story about seniors with student loan debt
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produced by _The Hechinger Report
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nonprofit, independent news organization focused on inequality and
innovation in education. Sign up for our __higher education
newsletter_ [[link removed]]_._

_Jon Marcus writes and edits stories about, and helps plan coverage
of, higher education. A former magazine editor, he has written for The
Washington Post, The New York Times, The Boston Globe, Wired,
Medium.com and the Times (U.K.) Higher Education magazine, among
others. His work has been honored by the National Headliner Awards,
Mirror Awards, National Awards for Education Reporting, City and
Regional Magazine Association, Deadline Club of New York City and
others. Marcus holds a bachelor’s degree from Bates College and a
master’s degree in journalism from Columbia University, attended
Oxford University, and teaches journalism at Boston College and
Northeastern University._

* Student Debt
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* Seniors
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* debt forgiveness
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