Adults Over Age 60 Currently Hold $66.7 Billion in Student Loan Debt
More older adults are taking on their grandchildren's student loan debts -- and sacrificing their financial security in the process.
"Student loan debt" is an all-too-familiar phrase nowadays, especially when paired with adjectives like "crushing," "insurmountable" or "overwhelming." And, for a very long time, it had been portrayed primarily as the "young people's" problem.
"After all," some have argued, "it was their desire for an education that led them to take out loans -- why shouldn't they bear the full burden of paying it off?"
Parents -- and Grandparents -- Are Stepping up to Help
Well, apparently not everyone shared the same (somewhat callous) sentiment -- specifically, the students' parents and grandparents. Rather than watch their loved ones struggle with debts, the family elders chose to take on that burden themselves. And according to a recent report from the Consumer Financial Protection Bureau, these seniors ultimately are paying the price.
The report's findings, as described in a Washington Post article, highlighted the fact that the number of older Americans taking on student debt on behalf of their children and grandchildren has quadrupled in the past decade.
...But at What Cost?
Consumers over the age of 60 are now on the hook for $66.7 billion in student loan debt. And with all of that money going out, and not much coming in, older adults are forgoing paying for their own self-care. Instead, they're taking on the education costs of their offspring.
The drastic debt increase amongst baby boomers can be mostly attributed to the ever-increasing costs of college. College Board estimates that the tuition and fees for one year at a four-year, public, in-state college is $9,410. Or, if you're going to an out-of-state, four-year public college, one year’s tuition could run you $23,890.
A study from the University of Southern California said that, on average, parents borrow $21,000 to help pay for the cost of college. But what happens when those parents begin to age, and need that money to care for themselves?
“Student loan debt is clearly an intergenerational problem, and what we’re seeing is that this is unfortunately putting older consumers’ retirement at risk,” Seth Frotman, assistant director of the Office for Students at the CFPB, tells the Washington Post. “Older Americans are struggling under the weight of student loan debt.”
With nearly 40 percent of federal student loan borrowers over the age of 65, many are defaulting on their loans -- the highest rate for any group -- according to the Consumer Financial Protection Bureau.
The Real Impact on Mom, Dad, Grandma and Grandpa
So what’s the impact on mom and dad? The Consumer Financial Protection Bureau’s report states that many of these older adults, who have absorbed their children and grandchildren’s student loans, are struggling to afford basic needs like paying for necessary doctor visits, prescription medicines, and routine dental care.
The report also shows that not only are aging parents passing over their own self-care costs, a portion of older federal student loan borrowers had their “Social Security benefits offset because of unpaid student loans”.
Scratching your head yet? Let the figures do the talking: The number of borrowers age 65 and older who had their Social Security benefits offset to repay a federal student loan increased from about 8,700 to 40,000 borrowers from 2005 to 2015.
“When you’re retired, you’re on a fixed income and there are so many things that could go wrong -- your house could get a leaky roof, you might need medical care -- and it becomes very difficult for people to balance all of those expenses,” Maggie Flowers, associate director of economic security at the National Council on Aging in Arlington, tells the Washington Post.
While you digest all of this, don’t forget that the cost of raising a child born in 2015 will run you roughly $233,610. And, no, that doesn’t include college tuition and fees.
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