According to a Consumer Financial Protection Bureau (CFPB) report issued in January of this year, student loan debt has significantly increased among Americans age 60 and older. How much do you ask? Over the last decade, the number of Americans age 60 or older with one or more student loans quadrupled from 700,000 to almost 2.8 million. Not only is that a significant increase, but that also makes them the fastest-growing segment of the market. In dollar figures, the average debt almost doubled from $12,000 to $23,500 with a total owed of $66.7 billion.
What’s more striking, three in four of these older borrowers did so to finance their children’s or grandchildren’s education—not their own or their spouses. While co-signing for your kids and grandkids may seem like a good idea, you may want to think twice about the consequences. If you default on federal student loans, the government can garnish your social security benefits. In addition to a social security garnishment, a portion of your tax refunds can also be offset for failure to pay.
Not a place where any senior citizen wants to be. Still, many senior borrowers find themselves in that position. According to the CFPB report, nearly 40 percent of federal student-loan borrowers age 65 and older are in default. Further, studies have shown that people who carry such debt later into their lives often struggle to repay. As reported by the Philadelphia Inquirer’s Erin Arvedlund, consumer rights advocates often point to loan servicers for mistakes in the repayment process. And my attorney colleagues here at Bond & Botes have written on this topic, including the CFPB’s recent lawsuit against the student loan servicer Navient.
Without delving into the disputes with loan servicers, there may be a common sense solution before you even co-sign: allow your kids or grandkids to sign the loans personally, if possible, and help them pay after they graduate. But what if you are already struggling with student loan debt? That’s where we can help. If you need to discuss your student loan debt with one of our experienced attorneys, please call and make an appointment at one of our Bond & Botes offices to set up a free appointment.