Maybe the country hasn’t truly addressed the student loan debt crisis because it’s seen as a generational problem.
Young people are the ones taking out the loans, it’s imagined, so the problem is theirs to solve. It’s an assumption that’s often tinged with condescension, a passing of judgement on the millennial work ethic, as if weekend and summer jobs could make even a small dent in the cost of college.
As it turns out, college debt is a problem for greybeards too.
A study released earlier this month by AARP revealed that student loan debt is growing “at an alarming rate” for adults aged 50 and over. In 2004, the organization reported, borrowers in the age group had $47 billion in student loan debt. By last year, the number stood at $289.5 billion.
To be sure, some of the increase can be attributed to the loans parents take out to help their children attend college.
“Almost everybody who needs a private student loan is going to need a parent or a grandparent to be a cosigner on it,” Persis Yu of the National Consumer Law Center told the AARP. Of the 3,000 surveyed by the group, 25 percent of cosigners said they had to make at least one payment on a loan.
That, however, is only a fraction of the problem. Increasingly, people are still carrying their own college loan debt as they near their retirement years.
The AARP lays it out clearly in its report:
“Over the past three decades ... the life cycle of debt has changed dramatically. The full cost of attending college has increased substantially during this period, with the average cost of a four-year higher educational institution more than doubling on an inflation-adjusted basis. Meanwhile, nationally, state and local funding per student for higher education has decreased. In addition, family incomes have not increased with inflation, much less the increase in college costs.”
According to the AARP report, more than 870,000 people over age 65 carried student loan debt in 2015. A staggering 37 percent of those people were in default, giving the federal government the right to take as much as 15 percent of their Social Security benefits for repayment. Those not in default still find themselves paying down debt rather than saving for retirement.
“In the pre-retiree years, which we typically consider to be ages 50-64, people should be at their peak earning years and also accumulating retirement savings, hopefully at adequate rates,” said Lori Trawinski, AARP’s director of banking and finance, and lead author of the report. “To the extent that their budget is squeezed by the need to make student loan repayments, it’s no doubt cutting into their ability to save for other purposes.”
As a way to ease the burden, the AARP suggests allowing older debtors in default to enroll in income-driven repayment plans and letting more loans be discharged in bankruptcy. The group also calls for an increased focus on financial literacy, to make sure borrowers are making smarter decisions in the first place.
Those sound a lot like solutions being offered — so far without success — as a way to address the college loan crisis for younger borrowers. It’s long past time to toss aside generational biases and get to the root of the problem.
As the AARP report puts it, “The increase in student loan debt today is an intergenerational problem, burdening borrowers of all ages and threatening the long-term financial security of millions of families.”
Maybe age doesn’t really matter.