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Senior citizens continue to bear burden of student loans
The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens.
New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.
That even seniors remain saddled with student loans highlights what a growing chorus of lawmakers, economists and financial experts say has become a central conflict in the nation?s higher education system: The long-touted benefits of a college degree are being diluted by rising tuition rates and the longevity of debt.
Some of these older Americans are still grappling with their first wave of student loans, while others took on new debt when they returned to school later in life in hopes of becoming more competitive in the labor force. Many have co-signed for loans with their children or grandchildren to help them afford ballooning tuition.
The recent recession exacerbated this problem, making it harder for older Americans ? or the youths they are supporting in school ? to get good-paying jobs. And unlike other debts, student loans cannot be shed in bankruptcy. As a result, some older Americans have found that a college degree led not to a prosperous career but instead to a lifetime under the shadow of debt.
?A student loan can be a debt that?s kind of like a ball and chain that you can drag to the grave,? said William E. Brewer, president of the National Association of Consumer Bankruptcy Attorneys. ?You can unhook it when they lay you in the coffin.?
Sandy Barnett, 58, of Illinois thought she was doing the right thing when she decided to pursue a master?s degree in clinical psychology in the late 1980s. She had worked her way through college but said she took out a loan of about $21,000 to pay for graduate school so she would have more time to focus on her studies.
But even after earning her master?s, Barnett struggled to find a job that paid more than $25,000 a year and soon fell behind on her payments. She suffered through a layoff, a stretch of unemployment and the death of her husband ? while her student loan ballooned to roughly $54,000.
Barnett filed for bankruptcy in 2005, but she couldn?t get out from under her student loan debt. She said a collection agency began garnishing the wages from her full-time job as a customer service representative a year ago, and now money is so tight that she must choose between buying gas and buying food. An air conditioner for her mobile home is an unimaginable luxury.
?I shake my head every day at the thought that I?m working for nothing,? Barnett said. ?It?s really a black hole because there?s no end in sight.?
(continued to page two at the link)
Re: Senior citizens continue to bear burden of student loans
And it pains me so when unemployed young folks have their safety net checks garnished to pay their SLs.
Sorry, I'm in a foul, unsympathetic mood at the moment that is completely unrelated to this issue.
<a href="http://www.thenest.com/?utm_source=ticker&utm_medium=HTML&utm_campaign=tickers" title="Home DI'm not feeling real sympathetic either since presumably these oldies were the ones who voted for the politicians who have created this problem.
This is kind of why I won't get a student loan.
My anthropology teacher (who, if I had to guess, looked to be in his mid-to-late thirties) told the class he would be paying student loans until he died.
I just couldn't be happy with that kind of debt hanging over my head.
Find me here instead!
As a result, some older Americans have found that a college degree led not to a prosperous career but instead to a lifetime under the shadow of debt.
This is kind of what I' getting at here. We need to stop pretending and telling our kids that a college degree is some kind of golden ticket that should be obtained at any cost.
FFS!
I've read that the root of the SL problem lies with this type of thing. Namely places like community colleges and junior colleges that sell SLs under the label of "night school." For those in dire straights, that you can get an influx of $10k or more by enrolling in a couple of classes. They bounce around for a couple semesters, get current on their bills, buy a car, and then never finish their degrees or pick up any marketable skills.
$10k or thereabouts isn't quite the same as somewhere over $100k or more for a high price, private university.
Ok. I have no dispute that SLs are getting waaaaay out of hand, but really? I have friends with only high school diplomas who make plenty more than 25k a year. Since the late 80s this lady couldn't find something a tad more lucrative?
I would say Sandy Barnett's story is one big ol' exception.
This is why i'm so happy that our county opened a "technical college high school" which is separate from our traditional vo-tech school. Students will be able to learn the necessary skills for going onto college or being in the work place. The response has been overwhelming and additional campuses are opening in the fall
Trust me, I know.
But people with $100k or more represent about 2% of the total number of borrowers. They are also much more likely to be employable somewhere - anywhere - that would make it possible to pay $1000 a month to Sallie Mae. Not all of them, but many of them. It is actually possible to pay that while making $50k a year. A stretch, but doable.
The people borrowing $10k and $20k are a much, much larger portion of those borrowing. My google-fu isn't working right now, but I've seen charts that show that the default rates for community college non-graduates outstrip default rates for any other segment. largely because SL money is offered to help the single mom with poor credit and a deadbeat ex-husband get her car repaired, and oh there's this extra benefit where you get to take a class on telecommunications from the comfort of your own home.
As all these 50somethings find themselves without employment, I suspect the trend of elderly in SL default mode will just continue to rise.
Even if you are only making 25K, after 30 years, you can't pay off 21K?
Is it just me, or is that poor money management?
That's what I was thinking but figured my math was fuzzy.
<a href="http://www.thenest.com/?utm_source=ticker&utm_medium=HTML&utm_campaign=tickers" title="Home DI can see that if you're only making $25k, probably every penny is going towards your basic living expenses and don't have much to put towards your loans. Even $50 a month for 30 years is only $18,000.
This makes a lot of sense, I didn't think about it that way.
Well, one of the problems is that if you take out those loans at 50, then 25 years is when you're 75. When your health care costs start skyrocketing.
And if you're using the SLs the way y4m's ILs did, you may have used them to finance a lifestyle you can't afford, so you may have spent the last 25 years living beyond your true means.
Careful what you say. That sounds a lot like Sanatorum and Romney.
Exactly this. And remember that she had interest on this that's accumulating, too... at 1980s rates, which around that time was SKY HIGH. 12% directly from the Treasury, so probably more like 15-18%. Hence her not paying them off ever.
I wonder how many of those "decades old" loans are because they co-signed for kids or grandkids? It's mentioned in the article, but a number would be interesting. For people 60+, college tuition was dirt cheap at a public university when they were young adults. Even by the late 70s/early 80s it was common for a summer job to be able to pay a full year's tuition plus part of room and board.
So . . . there may be individual stories I would sympathize with, but this article reminds me of an acquaintance of my brother's who went to school in his mid-50s purely to get the student loans to live on. Seminary at that, and he fits the most flammable stereotype of a condescending atheist elitist. I'm guessing there are a whole lot of people who found a way to take out student loans as yet one more way to live above their means.
I currently owe about 53k on my SLs and my interest rate is about 5.75%. If I pay them off on the schedule I'm on right now, I will be 51 when that is done. Had I not finished grad school at 26 but gone back as an adult and done grad school, I might be in my 60's when my loans are paid off too.
Now, I don't plan to actually take 25 years to pay them off, but $340 a month is a big bite out of my monthly income (about 15% or so) and it would be hard to double it (which would be necessary to pay them off in 10 years).
My DH, who only has a HS degree and some college, is now making about 5k less than me per year. When you deduct the 4k in student loan payments I make each year, I'm only making 1k more than him per year. I'm thrilled he's doing well, but it does drive home for me that a college degree (and a masters!) doesn't necessarily mean you'll make so much more money that the debt will be worth it.