Posted on 01/17/2017 8:37:01 PM PST by SeekAndFind
The number of older Americans taking on student debt on behalf of their children and grandchildren has quadrupled in the past decade, with consumers over 60 now holding $66.7 billion in student loan debt, according to a new report by the Consumer Financial Protection Bureau.
The skyrocketing cost of college has placed a particular burden on older Americans, many of whom are struggling to pay back growing debts in their retirement years, according to the report. Nearly 40 percent of federal student loan borrowers over age 65 are in default, the highest rate for any age group, the data show.
“Student loan debt is clearly an intergenerational problem, and what we’re seeing is that this is unfortunately putting older consumers’ retirement at risk,” said Seth Frotman, assistant director of the Office for Students at the CFPB. “Older Americans are struggling under the weight of student loan debt.”
Americans owe nearly $1.4 trillion in outstanding student loans. A slow job market recovery, growing income inequality and stagnant wages have made it difficult for younger Americans to be economically independent, and now there are signs that those financial struggles are dragging down their parents and grandparents as well.
“A large portion of older student loan borrowers struggle to afford basic needs,” the report said, adding that older borrowers were increasingly likely to have skipped necessary doctors’ appointments and prescription medications because they couldn’t afford them.
A growing number of borrowers over age 65 also said their Social Security benefits — often the only source of regular retirement income for older Americans — had been seized because of unpaid student loans, according to the report. Those with student loan debt also had less money saved for retirement than their counterparts without student debt did.
(Excerpt) Read more at washingtonpost.com ...
Probably federal PLUS loans— loans parents can take out for a child’s education. I kid you not, I know a parent making about $25,000/yr that owes $200,000 because they wanted their kid to go to NYU. They can never pay that back. Another little secret— borrow as much as you want, enter the governments “income based repayment program” and even if you have no job— no income— all this means is your payment is $0 and each month you pay $0 is credit toward paying your loan! Now, if you later get a better job your payment will change but any remaining balance is discharged after 25 years or 10 years if you work in the public sector. In other words, we pay.
People who have outstanding debt are less likely to have reserve savings than those who do not have outstanding debt. THis is a surprise?
Unless interest rates are very low, or the rate of return on savings is very high, paying off debt is usually a very good investment—and if people can’t afford to do this, they can’t afford much else.
You are right. Academia has become bloated with “professors” that think that they all need to make 100K. When I went to law school in the 70s, the cost was $750 a semester. “professors” made 45K and were happy with that. Academia has become an industry of bloodsuckers.
Student loans cannot be deleted via bankruptcy.........the IRS can and will garnish your paychecks from Mickey D’s.........
“Griggs v. Duke Power Co”
that single 1971 SCOTUS decision killed the chances of non-college applicants to get hired by corporations.
Corporations began insisting on college degrees as a screening mechanism since that decision ended their ability to do their own screening
Once colleges became the gatekeepers for employment they could dramatically raise their fees
Another consequence of civil rights legislation
Perhaps schools should learn from the fast food industry and replace overpaid professors with self service kiosk. Preferably ones without commie liberal ranting on the menu.
My tuition was $500 too. That was early-mid 80s. I think the cap for student loans back then was $8000. Yeah, it’s mind boggling how cost of college has risen since then.
College isn’t worth it. But there are few other options.
Actually, these “elderly” were young hippie stoners in the 60s getting worthless degrees. And now they’re still paying off their six-figure loans.
Thanks, Obama.
Imagine the headline if there had just been eight years of Republican presidential control.
If anyone wants an example of predatory lending, here it is.
Liberals taking in the gullible to feed their academic cash cow.
Thanks for the info on Griggs.
It’s starting to make sense now.
The good professors deserve to be appropriately compensated, the bad ones need to be fired. Tenure needs to go away, at least at public schools. Some of the worst professors were the tenured ones who mad close to 6 figures, had office hours twice a week for 45 minutes at best, etc. I had one professor who would only respond to student email on certain days and times. some of the best ones has almost daily office hours, stayed after class when possible, etc.
it was a very destructive decision and badly needs to be overturned. Most people have never heard of it.
After that 10 or 25 years in the income based repayment plan, the unpaid balance is forgiven. But you get a 1099 for that amount, which includes compounded interest. So you wind up with no more loan, but with a hefty tax bill.
I read the linked to article below about federal financial aid with some interest since I am a retired chief financial officer for a small private college. I would add to what has occurred a less charitable interpretation than the Law Unintended Consequences. The following story illustrates my point.
As part of applying for participation in federal programs each year colleges prepare sets of student budgets. These then appear in the award letters. The Department of Education when analyzing the student and family data provide an expected family contribution. The difference between the budget and expected family contribution the college then attempts to fill up with grants and loans. In most cases, at least for privates, there remains an unmet need. However, students still successfully complete the school year. I analyzed this figure annually to hold financial aid people accountable for adopting standards for awards which took into account reasonable measures (they didn’t think so) of this unmet need for the next year.
Now came the American Opportunity Credit and Lifetime Learning Credit that were supposedly of direct benefit to the student and their parents. I plugged those into the figures for unmet need to require greater average contributions and lesser awards by the college. I made sure the student and their parents were conduits for and not recipients of the majority of these tax benefits.
This story illustrates how college financial people have behaved ever since the feds started throwing money at colleges. Similar information has always been part of the pervasive public knowledge available to legislators considering policies for Pell, SEOG, Guaranteed Student Loans, PLUS Loans from parents, etc. Evidently since I retired 15 years ago, politicians have hugely increased the amount students and their parents can borrow.
There was always any number of professionals who were available to testify concerning the inevitable consequences of these programs; that the major consequence would always be an unbounded increase in college costs.
Such individuals were ignored and/or never given a forum. The programs were just too attractive to assist in re-election. I would propose the LAW OF PREMEDITATED IGNORANCE to account for this phenomenon.
Federal Student Aid and the Law of Unintended Consequences
http://eagleforum.org/publications/educate/sept12/federal-student-aid.html
But there are ways to avoid the tax burden if you have a low income.
If you have federal loans that can be put into the federal income based repayment program, you can not be required to pay more than 10% of your discretionary income per year. Based on the government’s formula. I believe if you make below the poverty line, that is 0. I know of a person that owes over $150,000 and pays about $600 a month. They are a teacher and coach and make about $90,000/yr. They will be done paying in 4 years, never paying back the entire loan.
I agree 100% with your post. Also, in addition to federal loans there is the private student loans students and parents take out to pay the bill. Some debt is to be expected, piling loans upon loans and allowing parents to borrow almost unlimited amounts is a disaster. You would think parents would know better. We told our own daughter that we would pay up to the cost of a state school— out of our hard earned savings. When visiting schools she was encouraged to take out the max in loans and to have us do so as well. Right now she seems quite happy to be at the school that gave her a decent scholarship and kept us paying what we had agreed to. One school we visited made her feel like we were short changing her by not agreeing to pay an outrageous amount, by any means possible. But she’s now very happy where she is.
[Student loan debt is worse than any other debt, even taxes....Student loan debt is nondischargeable and it will follow you to the grave.]
I agree. I have studiously (pun intended) avoided any student debt for these 8 Obama years. I could take classes ... and STILL not be able to find a decent job.
Those days are pretty much over. The cost is way too high these days given the REAL unemployment situation in the U.S.A.
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