In July 2023, Americans with student loan debts received an email stating eligibility to have their student loan(s) forgiven. Most recipients were skeptical. While the subject line was promising, the Supreme Court had just rejected the Biden Administration’s ambitious plan to forgive $430 billion in student loans.
The reality is that many Baby Boomers and Gen-Xers are still burdened with student loan debt, and their numbers are on the rise.
The hidden struggle
There are 8.8 million borrowers aged 50 and older who collectively owe $380 billion in student loans. A recent study by New America, a policy research organization, revealed that the number of student loan borrowers aged 60 and older has grown six-fold between 2004 and 2023. So, what’s behind this growing dilemma?
Rising cost of education
The increasing cost of college education is one reason for older Americans’ debt. Tuition fees have more than doubled over the past three decades, even after adjusting for inflation. Most people cannot afford to pay for college out of pocket. Federally insured student loans are easy to get, making an expensive education accessible at any age.
Fluctuation in the economy has also played a role in the growing student loan debt crisis. Many borrowers experienced multiple economic downturns, such as the Great Recession, which impacted their financial stability.
The weight of the debt
For older Americans, dealing with student loan debt can be overwhelming. Student loans are hard to discharge, except in cases of death or serious disability. Those who default on their loans face garnished wages, delayed retirement and threats to their housing plans. Over 114,000 borrowers have had Social Security withheld because they couldn’t make their loan payments.
A hopeful change
Recently, there’s been a glimmer of hope with student loan forgiveness options. A provision in student loan legislation allows income-driven repayment plans. These plans forgive loans after 120 payments. This provides a much-needed lifeline for many borrowers but still leaves a large percentage with significant debt.
The student loan debt crisis is not exclusive to the younger generation. Millions of older Americans face a cycle of debt affecting their financial security. When loan forgiveness is not an option, seniors with student loan debt should consider consulting a bankruptcy attorney.