Fact Checked

Student loan debt growing among older Americans

Mature woman and man calculating home finances at the tableImage: Mature woman and man calculating home finances at the table

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The pathway toward retirement may be a lot more treacherous than older Americans would like to admit. And for many, one of the main culprits goes all the way back to the college years.

According to new data from the U.S. Department of Education, student loan debt for people aged 50 and older has risen precipitously over the past year. Between the second quarter of fiscal year 2017 and the first quarter of fiscal year 2018, Americans aged 50 and older saw their student loan bill increase by about $18 billion.

A report released in 2017 by the Consumer Financial Protection Bureau seems to confirm that older Americans’ student loan debt has increased at alarming rates over the last decade. It says that consumers aged 60 and older are the fastest growing age segment of the student loan market.

Putting two and two together, this means many people who should be thinking about their retirement plans may instead be contending with large amounts of student loan debt.

That sounds like a bad recipe for a happy retirement.


Why do so many older Americans have increasing student loan balances?

The growing student loan debt for older Americans may be related to a number of factors.

According to the CFPB’s 2017 report, older Americans have a host of financial responsibilities. For one, many older Americans carry other types of debt in addition to student loan debt, such as mortgages, auto loans and credit card debt. Dealing with debt in those categories can make it more difficult to focus on paying down student loan balances.

And make no mistake about it — older Americans don’t just carry student debt related to their own education. As the cost of going to college has skyrocketed, a growing number of parents (and grandparents, too) have taken on student loan debt to finance their children’s education.

Although not addressed in the CFPB report, there could be borrowers who simply enrolled in higher education later in life. This group may include those who return to school to further their education with an advanced degree or learn new skills for a career change. With potentially less time spent in the workforce to recoup the cost of that investment, they may struggle to pay off loans until much later in life.

So what?

The CFPB and other organizations have reported some alarming issues when it comes to older Americans carrying student loan debt.

The CFPB reports that among heads of household ages 50 to 59, those saddled with student loan debt have saved less for retirement than those without any outstanding student debt.

That may sound somewhat obvious, but it can have serious repercussions that extend beyond retirement. Older Americans who struggle to pay off student debt may also struggle to find the money for the most basic necessities.

For example, a recent survey by NORC at the University of Chicago and West Health Institute showed that baby boomers and Gen Xers would skip medical care because of the cost.

It seems clear that student loan debt isn’t just a siloed issue among a few older Americans. And it might not just affect those on the cusp of retirement (or already retired). It may also trickle down to affect those who become their caretakers later in life, such as adult children and grandchildren.

What can you do?

In light of what could be at stake, it might be a good time for families to come together and talk about how student loans can be handled better.

Here are some suggestions for getting the conversation started:

  • If your parent or grandparent has taken out a student loan on your behalf, check in with them. This can help you find out how they’re faring with the payments.
  • If you’re an older American with student debt, speak up. If you have outstanding loans because of your children or grandchildren, it’s OK to let someone know you might need help — either with payments or understanding your payment options.
  • If you’re a parent, have the money conversation with your parent (or child) as soon as possible. Find out if the loan burden can be shared or if there are payment options that can help take the sting out of higher loan balances. After all, if someone’s financial security, well-being and quality of life are at stake, it’s better to be proactive.

About the author: Aja McClanahan is a Chicago-based writer and blogger who covers topics on personal finance and entrepreneurship. She holds a bachelor’s degree in economics and Spanish from the Universit… Read more.