Student loan debt has reached a staggering high of $1.3 trillion. This figure will continue its upward movement because the average student loan continues to increase with every passing year. The average student loan debt granted to college graduates for their bachelor’s degrees in 2012 amounted to $29,400, according to the Oakland, California-based Project on Student Debt at the Institute for College Access & Success.
When it comes to student loans, many people might feel that the people most burdened by the student loan debt are the college-going youngsters. However, in his column, Thomas Sparrow gives a different insight into this assumption.
Sparrow cites the example of Janet Lee Dupree, a 72-year-old with a financial debt of $16,000 in student loans, which she acquired way back in 1971 and 1972. Dupree had originally borrowed $3,000 for completing her undergraduate studies in Spanish. Her health issues took precedence over everything else at that time and as a result, she defaulted on her loan.
When she turned 65, the authorities withheld money due from her Social Security benefits because of her outstanding debt. Working as a substance abuse counsellor at present, Dupree has recently received a notification that the authorities will be garnishing her wages, as she is still working.
Dupree’s case is not a one-off. The Government Accountability Office (GAO) recently released a report that highlighted the growing burden of student loan debt on older adults. The report revealed that:
- In 2005, older adults (aged 65 years and over) had a total outstanding federal student debt of about $2.8 billion
- In 2013, this amount swelled to about $18.2 billion
These individuals accounted for 706,000 households in the country. The number of affected households might seem small as opposed to the 22 million households with people below 65 years of age holding student loan debt. However, that does not conceal the extent of the problem.
The GAO report mentioned that people over 65 years of age were defaulting on their student loan debt at a faster pace than borrowers from other segments of the population. According to the report, the authorities offset Social Security benefits of 155,000 borrowers to pay for student loan debt in 2013. In 2002, the corresponding figure had been just 31,000.
According to the author of the report, Charles Jeszeck, this problematic situation could force many senior citizens to extend their working life beyond their retirement age. When taken in conjunction with the reduction in the Social Security benefits, this situation could lower the standards of living for many of these borrowers. Jeszeck feels that some of them might even need to confront the harsh reality of a poverty-level standard of living in their retirement years.
Although it affects a small segment of the population currently, the ever-growing levels of student loan debt will increasingly cast a long shadow on the lives of many borrowers. At some stage, the 114th Congress will have to take steps to remedy the situation in 2015. If the authorities could move the Higher Education Affordability Act forward in the next Congress, the bill could address a number of concerns regarding student loans.
Until then however, many students could find that pursuing higher education is well beyond their means. Simultaneously, students taking out loans for pursuing higher education could find that life after graduation continues to remain unaffordable.