Jan. 17 (UPI) — The vast majority of people in the United States holding student debt are between the ages of 18 and 39, but a new report suggests seniors are taking on more of the debt burden for their children and it is endangering their welfare.
The number of seniors carrying student debt quadrupled during the last decade while the average amount of debt those people carry doubled in that time, as did the portion of student debt held by people over 60, according to a new report from the Consumer Finance Protection Bureau.
Because many parents and grandparents are borrowing the money for their children and grandchildren to go to college, but offering the help comes at a price for some as they endanger their ability to pay for healthcare and risk garnishment of social security payments if they fall into default.
“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, told The Washington Post. “Older Americans are struggling under the weight of student loan debt.”
Researchers at the CFPB found people over 60 are the fastest growing demographic borrowing money for school, currently carrying about $66.7 billion in student loans — 6.4 percent of all student debt, more than double the 2.7 percent it was in 2005.
Overall, the number of people 60 and over carrying student debt quadrupled from 2005 to 2015 from around 700,000 borrowers to roughly 2.8 million. During that time, the amount of money borrowed by seniors doubled from and average of $12,000 to $23,500.
While the researchers say the number of seniors carrying their own or their spouse’s student debt later in life is increasing, most — 73 percent — of student debt held by seniors was for their children or grandchildren.
This extra debt to help family members, when thrown on top of other debts held by seniors — in 2013, 63 percent also had mortgages, 67 percent had credit card debt and 45 percent had car loans — is causing a steady increase in defaults as well: Nearly 40 percent of people over age 65 have student debt that is in default.
Researchers at the CFPB also considered thousands of complaints from seniors about problems they’ve had understanding loans, making payments or dealing with any of the people charged with helping them repay debt.
The CFPB suggests working with seniors to help them use income-driven repayment plans, which cap payments at a percentage of income and can help people from falling into or getting out of default. Better counseling of how the loans work also would help immensely, the agency says in the report.
“Compaints submitted by consumers related to co-signing [for loans] raise important questions about whether the information provided at the point of origination is sufficient to ensure these consumers understand the long-term cost and risks associated with this debt,” researchers at the agency wrote.
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