Most people like to think of their senior years as when they’ll finally be able to take a break after decades of hard work, maybe do some of the things they’d always dreamed about, unfettered by the daily demands of the workplace. Many seniors have worked hard and sacrificed to build a nest egg so they can achieve these dreams.
But increasingly, older Americans are finding themselves worrying about something they might not have factored into the carefully laid plans they made decades ago: student loans. In a report released recently by the Consumer Financial Protection Bureau, the agency announced some startling numbers regarding the number of seniors (defined as those 60 or older) who are trying to pay off student loans. In the decade from 2005 to 2015, the number of seniors carrying student loans more than quadrupled (from 700,000 to 2.8 million), with a combined debt load of $60 billion. On average, this works out to about $23,500 per senior carrying student loan debt. And it’s having a profound impact on their ability to handle their finances.
What’s going on here? The most obvious answer would be that it’s the result of people going back to college in middle age, or paying off their own old college loans. While both of those things are true, most of that debt is actually from parents shouldering the debt for their children and grandchildren. In some cases, those kids and grandkids have defaulted, placing the burden on the shoulders of the previous generation (who had co-signed). In other cases, parents or grandparents have offered or agreed to take on the responsibility of paying for their descendants’ college educations.
Most seniors live on fixed incomes and finance their lifestyles through a combination of Social Security, pension plans, annuities, cash they stashed away for the future and, in some cases, employment. But the added pressure of student loans is, in some cases, making seniors work longer, stress about handling the debt and facing an uncertain financial future.
“It is alarming that older Americans are the fastest-growing segment of student loan borrowers,” said Richard Cordray, director of the Consumer Financial Protection Bureau. “Many of these older Americans are helping to finance their children’s or grandchildren’s education while living on a fixed income. We are concerned that student loans are contributing to financial insecurity for many older Americans and that student loan servicing problems can add to their distress.”