America has a Massive Economic Problem as Seniors Struggle with Student Debts
Posted by: TLB Staff
It is almost practically impossible to go through life without taking up one kind of loan of the other; although there could be an exception if your parents have very deep pockets. Even then, you’ll still need to take on credit card debt, at least to create a semblance of credit history. People take different types of loans for different purposes as the needs arise. Auto loans can help you buy a car, business loans helps you to start or grow a business, and a mortgage could help you become a homeowner.
However, the current economic reality suggests that taking student loans could be synonymous with dining with the devil. Many people who took up student loans with the expectations that they’ll be able to pay off the debt are still stuck under huge debt burdens. This piece seeks to examine how student loans burdens are weighing many older borrowers.
Student loans are turning debt burdens for older borrowers
A new report (opens PDF) from the Consumer Financial Protection Board published last week shows that the crazy mountain load of student loan debt is not limited to recent college graduates. The report reveals that many older Americans are also suffering under the weight of a massive student loan debt burden. The report shows that the number of older Americans (60 years and older) with student loan debt has quadrupled in the last decade.
The report maintains that about 700,000 older Americans had student loan in 2005 – by 2015, the number has soared to 2.8 million with an estimated $66.7B owed in student debts. Of course, young adults aged 18 to 39 make up the bulk of student loan debtors; yet, older borrowers seems to make up the fastest growing demographics of people with student loan dent. In fact, the number of student loan borrowers older than 60 years has jumped from 2.7% to 6.4%.
The United States has about 67 million adults aged 60 years and above; hence, the 2.8 million older borrowers with student loan debt represents about 4.2% of the demographics of older Americans. More worrisome is the fact that older borrowers seem to struggle under a bigger amount of student loan debt than they had 10 years ago. In 2005, the average student loan debt for older borrowers was $12,100 – as at 2015, the average student loan debt for older borrowers was $23,500.
Why are older borrowers taking up student loan debt?
It looks very strange and weird that people aged 60 years and above are struggling under a debt burden of student loans. The CFPB report shows that older borrowers are taking up student loans to pay for their children or grandchildren’s education. Hard data reveals that as much as 73% of older borrowers with student loan debts got into the debt in order to finance a child or grandchild’s education. In contrast, only 27% of student loan debtors actually look the loan for their own or spouses’ education.
The rising trend of older borrowers with massive student loan debt paints a gloomy economic picture for America’s middle class. Many of these seniors with student loan debts will have a tough act balancing their loan repayment schedules with other living expenses. The more troubling fact is that seniors tend to have more medical needs related to aging; yet, the fact that they have massive student loan debt could make it hard to them to access the needed healthcare services.
CFPB Director Richard Cordray observes that “many of these older Americans are helping to finance their children’s or grandchildren’s education while living on a fixed income. We are concerned that student loans are contributing to financial insecurity for many older Americans and that student loan servicing problems can add to their distress.”
TLB Note: This is a Sponsored Article, but the information presented is both vital and accurate for the financial burdens we as Americans are facing at an ever increasing incidence today.