By: Lance T. Denha, Esq.
Those that have thought about co-signing or taking out student loan for their child’s education will need to think long and hard about what recent statistics show.
A new report suggests that many baby boomers are having some difficulties making payments for their federal student loans to send their children to college. As a result of doing so many have run the risk of depleting their retirement account as an act of good will to better their families fortune and future.
According to data covering the second quarter of 2014, the number of Americans age 50 and older with outstanding student loans had almost tripled to 2 million since 2005. Debt has risen, according to this report, from $8 billion dollars in 2005 to $43 billion in 2014.
Although this makes up a smaller portion of the $1 trillion dollar outstanding student loan debt, this still remains a viable issue worth addressing. Reason being is that the default rate of this sector was 19 percent between the ages of 50 to 64, whereas those whose ages ranged from 25 to 49 years of age had a default rate of 12 percent.
What is even further startling are the number of senior citizens that still have outstanding student loan issues. More than 700,000 households whose head of the household are ages 65 or older, currently have student loan debt. The total outstanding amount owed by borrowers aged 65 or older, according to the U.S Government Accountability Office (GAO), rose to approximately $18.2 billion.
The problems facing older student loan borrowers was the subject of a hearing recently by the Senate Special Committee on Aging, at which several lawmakers said the issue has been under the radar but needs to be addressed. It’s unclear whether the student loan debt that is increasingly burdening older Americans is most attributable to decades-old loans from traditionally aged students that were never repaid or more recent borrowing, to finance adult education, for instance. The Education Department was unable to provide GAO researchers with the borrower-level detail needed to make such a distinction, the agency said.
The number of borrowers, especially older borrowers, whose Social Security benefits are seized by the government because they have defaulted on their student loans is also increasing.
Between 2012 and 2013, Social Security garnishments for defaulted student loan debt increased five-fold across all ages. During that same period, the number of borrowers 65 and older who saw their monthly social security checks reduced jumped roughly 500 percent, from 6,000 to 36,000 borrowers.
With all this being said, it is never too late to get the help you need to combat this issue dealing with Student Loans.