2 Million Americans 55+ Are Still Paying Off Student Debt

By: Nancy Bilyeau · May 31, 2024 · Reading Time: 3 minutes

Retirement could prove a daunting challenge for millions of Americans aged 55 and older who still have significant student loans, according to a study by the Schwartz Center for Economic Policy Analysis , a think tank within The New School’s department of economics.

More than 1.4 million workers and over 820,000 unemployed people over the age of 55 are saddled with student loans, according to the study.

“This student debt hinders older debtors’ ability to retire and save for retirement,” according to the author.

Older Workers in Crisis

Student loans are sometimes described as “good” debt because borrowers can increase future lifetime earnings. In other words, it’s debt that gets you something in return, unlike other types, such as credit card debt. But older debtors likely have fewer working years ahead of them, so the continued debt burden presents more of a challenge.

In fact, half of all debtors over age 55 who are still in the labor force are in the bottom half of income-earners, earning less than $54,600, based on Schwartz Center estimates using data from the Federal Reserve Board’s 2022 Survey of Consumer Finance (SCF) .

The data found that borrowers aged 55-64 will need to take an average of nearly 11 years to repay their outstanding student loans, while workers 65 and up will need 3.5 years to pay off their remaining student debt.

It’s an especially daunting situation for people over 55 paying off debt who don’t even have a college degree. According to the study, over 14% of older debtors never actually completed their degrees.

“These older workers face the dual effects of both indebtedness and lack of enhanced earning power, making them especially precarious,” per the study.

Finding Help

The study calls for continued support for student loan forgiveness, particularly relief obtainable for certain types of borrowers through the Saving on a Valuable Education (SAVE) plan.

But the study also put the spotlight on the government’s garnishing of Social Security payments if someone claims benefits while their student loans are in default, which is making older borrowers’ problems more acute. Under the Treasury Offset Program (TOP), the federal government can collect tax refunds and benefits, such as Social Security, from those with outstanding student loans.

This is highly relevant because nearly 40% of federal student loan borrowers over the age of 65 have defaulted on their loans, according to the Consumer Financial Protection Bureau (CFPB) .

“Although most student loan borrowers are young adults between the ages of 18 and 39, consumers age 60 and older are the fastest growing age-segment of the student loan market, said the CFPB.

Find the full findings of the Schwartz Center Study here .

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