Thursday, June 16, 2016

Baby Boomers Suffer From Student Debt, Too

Is student debt a problem for baby boomers?

Although we think of student debt as affecting new graduates and young adults, research shows that a surprising number of baby boomers are still carrying the weight of debt from their educations. According to the Federal Reserve Bank of New York, the number of borrowers 60 years of age and older was up from 700,000 people in 2005 to 2.2 million in 2014.

Furthermore, the U.S. Government Accountability Office (GAO) reported that the total outstanding educational loans held by people 65 and older had grown from $2.8 billion in 2005 to a whopping $18.2 billion in 2013! That’s twice the rate of the overall growth in student debt. This is particularly troubling since these debts affect individuals nearing the age of retirement and/or those living on fixed incomes.

Several factors in this disturbing trend are noteworthy -- some are familiar, some less obvious:

  • Most loans (82 % for those over 65) are for the older adults' educations, not their children's
  • Nonetheless, student loans for parents have also been steadily increasing
  • College costs are skyrocketing
  • The Great Recession ate away at many people's savings
  • For many, wages have been stagnant for quite some time; for some, wages have declined
  • There has been a shift from full scholarships to financial aid packages

According to Emily Brandon, the author of Pensionless: The 10-Step Solution for a Stress-Free Retirement and a senior editor for U.S. News & World Report: “These loans stay with you until they’re paid off, and conceivably you can carry them well into retirement.”

The New York Federal Reserve report, entitled "The Graying of American Debt," uncovered the fact that debt for those ages 50 to 80 increased by approximately 60 percent during the past 12 years. Perhaps most astonishing of all, while mortgage, auto payments and credit card debt have remained constant, student debt more than doubled during that period. Since retirement plans are already unstable for too many Americans, this information prognosticates badly.

For adults in their later years, this is particularly ironic, since many of these senior citizens accrued debt by returning to school in an attempt to update their skills to find better employment. Even though more millennials carry student debt than do baby boomers, the debt is more likely to negatively affect the financial goals of seniors than their younger counterparts. Many older individuals, particularly those who have suffered unexpected calamities, such as the death of a spouse, property damage from severe weather, job loss or illness, filing for bankruptcy may become necessary.

If you find yourself burdened by overwhelming debt from any cause and are considering filing for bankruptcy in Ohio, it is important that you consult with an experienced law firm that specializes in the field.  A free consultation can be the first step toward regaining your peace of mind.

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