Like a growing number of student loan borrowers, 60-year-old Beatrice Hogg will be paying off her loans well into her 80s.
“I'll probably die before I pay off the loan,” says Hogg, a social worker living in Sacramento, Calif. In total, she owes $45,000 in outstanding federal student loan debt. She borrowed the money in the early 2000s in order to finance her Master of Fine Arts degree in creative nonfiction, which she received in 2004 from Antioch University of Los Angeles.
With monthly payments of $251, Hogg says she doesn’t expect to pay off her loans until well into her 80s. That could easily change if she runs into the same bouts of unemployment that have dogged her over the last decade, leading her to defer her payments several times.
Hogg’s story is further proof that student debt has become a multi-generational issue. A recent report by the Consumer Financial Protection Bureau found the share of Americans 60 years and older who carry federal student loan debt has quadrupled over the last 10 years — from 2.7% of all borrowers to 6.4%. In total, this group of borrowers carries roughly $66.7 billion — or 5.4% — of all outstanding federal student loan debt in the U.S.
According to the CFPB’s report, borrowers who carry student debt late into their lives have more trouble repaying them, reflecting other possible financial issues. Borrowers over the age of 60 were twice as likely to have missed at least one student loan payment compared to the same group in 2005, the CFPB found, and 2 in 5 of borrowers 65 and older have loans in default.
The CFPB reports older Americans burdened with student loan debt are also more likely to skip important health care purchases like prescription medication, doctors’ visits, and dental care because they can’t afford it. As an example, the report cites a separate, 2016 study that found 39% of older borrowers said they skipped those needs compared to 25% of those without a student loan in 2014.
As student loan borrowers have grown older, the number of borrowers who have their Social Security benefits garnished because of student loan payments increased from 8,700 to 40,000 from 2005 to 2015 according to the CFPB. The U.S. government can garnish up to 15% of a borrower’s Social Security benefits as long as the remaining balance is greater than $750 each month.
How did we get here?
Nearly two-thirds, or 73%, of student loan borrowers 60 and older said they took on student debt for a child’s or grandchild’s education. More than half (57%) of all those who co-signed student debt are 55 and older.
Adding to the burden of debt, says Betsy Mayotte, an expert in student loan repayment strategies at American Student Assistance, is the fact that families are now borrowing more than ever to pay for rising college costs. For example, between 2006 and 2016, in-state tuition and
fees at public four-year institutions outpaced inflation by about 3.5% per year according to the College Board. In 2016, the average in-state student at a public four-year institution paid $3,770 in tuition and fees compared to $2,220 in 2009.
“You can have families with a lower income level end up taking out six figures in student loan debt,” Mayotte says.
Another reason student loan borrowers are getting older is because they now have the option to extend their repayment terms if they are struggling to make payments. The Obama administration rolled out several of these income-driven repayment plans in the years after the Great Recession.
The lasting impact of senior student loan debt
It’s simple to understand how paying student loans leaves less to save for retirement.
“For every dollar that you pay toward your student loan payment, it’s a dollar that you’re not putting toward retirement,” says Mayotte.
Hogg now works as a county social worker and began making payments again in December 2015. She says she’s “been current ever since,” but she has yet to contribute to a retirement plan.
“I’m sure that if I didn't have the [student] loans, I could have probably set myself up better for retirement,” says Hogg. “Hopefully I'll be able to stay at my job until I’m vested in their retirement plan.”
Tips for struggling student loan borrowers
Try an income-driven repayment plan
If you have federal student loans and are struggling with your payment each month, you may want to consider requesting an income-driven repayment plan through your loan servicer. The plans can reduce your payment to as little as $0. You can also request to defer your loans or place them in forbearance if you’re going through financial hardship. Just keep in mind that interest is still accruing.
“It could be tempting to try to get the lowest payment on your student loans,” says Mayotte. But remember, “you’re trying to win the war and not the battle. The longer you pay over the life of the loan, the more you pay in interest.”
Mayotte recommends creating a budget to figure out the most you can afford to pay toward your loans each month. The Department of Education has a calculator on its website that you can use to see your estimated payments under each repayment plan.
When you’re on a income-driven repayment plan, you should keep in touch with your loan holder, and don’t forget to apply for renewal each year.
Unfortunately, if you have private loans, there’s not much you can do to reduce your monthly payment outside of consolidating or refinancing your loans with a lender like SoFi, Earnest, or LendKey. Mayotte says she sees those with private loans and those who don’t complete their degree or program struggle most with repayment.
“The people that I haven't been able to help almost exclusively have had private student loan debt,” says Mayotte. She says it’s because they don’t have the many repayment options federal student loans do and “life can happen.”
The final word
Despite her debt burden, Hogg says she’s happy as a social worker and says she doesn't regret getting her master’s. She regrets that she used student loan debt to finance it.
“I regret that I had that big of a gap in my payments from being unemployed. I just wish there were more grants available for getting a higher degree,” says Hogg.
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