“Retirement” and “student loans” are two terms you might not hear often in the same sentence. But in fact, student loans are growing rapidly among people in or approaching retirement age. Education loans held by people 50 and over have increased 30% since 2005, according to the Federal Reserve Bank of New York, and now constitute 17% of $1.2 trillion in outstanding student loan debt.
According to the Government Accountability Office, student loan debt owed by people 65 and older increased sixfold between 2005 and 2013, from $2.8 billion to $18 billion. About 80% of that debt was incurred for their own education, and 20% was for their children’s. Default rates are also higher for seniors. While 12% of student loans were in default for people age 25 to 49, 27% were in default for those age 65 to 74, and 50% for those age 75 or over.
Rosemary Anderson, 57, took out $65,000 in student loans 20 years ago to finance her bachelor’s and master’s degrees. But a divorce, a layoff, and caring for her sick brother caused her to stop making payments a few years ago. She is now stuck with $152,000 in debt. Under current law student loans never expire, and creditors can garnish Social Security benefits to repay loans that may have been taken out decades ago. One counseling agency reports that it worked with 1,000 clients who’ve had their Social Security benefits garnished in the past year, compared with 200 the year before.
Although Anderson doesn’t regret pursuing her education, she will have to make payments of $699 a month until she is 81 years old. She also has a $2,200 mortgage payment, which comes out of her $3,400 salary and any other work she can find.
“I will be working for as long as I’m employable. I will never be able to retire,” she says.