American seniors at age 62 and older have become the fastest-growing segment of student borrowers in the country, with as many as 20% of the 45 million Americans who hold student debt being over the age of 50. This is according to an article published this week in The New Yorker magazine.
“Between 2004 and 2018, student-loan balances for borrowers over 50 increased by 512%,” the article explains. “Perhaps because policymakers have considered student debt as the burden of upwardly mobile young people, inaction has seemed a reasonable response, as if time itself will solve the problem. But, in an era of declining wages and rising debt, Americans are not aging out of their student loans — they are aging into them.”
Typically, credit utilization in the form of student loans comes with the assumption that younger students will be able to pay such debt off after graduation, having acquired high-paying employment as a direct result of a costly, multi-year education.
However, the increasing prevalence of older student borrowers could serve to actively challenge such a notion, the article says.
“Eroding union density, declining wages, and skyrocketing tuition have all made college less a path to high-paying jobs than an escape hatch from the worst-paying ones,” the article reads. “Those who have taken on debt are increasingly unable to pay it off; many haven’t even received diplomas.”
This is especially true for borrowers of color, the article says, who typically borrow more to attend colleges and tend to carry balances over a longer period of time. The trend toward older student borrowers is making such situations more prevalent in the class of student borrowers broadly, and affects seniors who both choose to go back to school themselves as well as family members they may choose to get the loans for.
“Although most older student debtors have borrowed money for their own education, approximately one-third have taken out loans on behalf of a child or grandchild,” the article reads. “Unlike direct federal loans, which have borrowing limits, parents can take on virtually infinite amounts of debt — up to the full cost of attendance each year — to finance their children’s education through a program called Parent Plus.”
If borrowers become delinquent on student loan payments, then defaults can trigger the Department of Education to command garnishment from taxes, wages and — of particular concern for seniors — social security benefit payments.
Read the article at The New Yorker.