Senior citizens feel sting of loan debt

A new report from the Federal Reserve Bank of New York shows that the growing burden of student loan debt is creating problems for an unexpected group—senior citizens. 

From grandparents co-signing loans for grandchildren’s college to senior citizens dealing with their own unpaid college debt, there seems to be a new area of concern when it comes to student loan debt. 

Peter Kerwin of the Rhode Island Higher Education Assistance Authority joined The Rhode Show with more.

This is really shocking.  What were some of the findings here?

For months now, there has been a steady drip of news stories about the growth of student loan debt.  We had student loan debt outpacing credit card debt for the first time, we had it surpassing the $1 trillion mark, we had the consumer bankruptcy attorneys warning of the coming student loan debt “time bomb”.  There’s been this growing chorus that we have a real problem on our hands.  

But this research from the New York Fed is just shocking.  They found that Americans 60 and older still owe approximately $36 billion in student loans.  In the third quarter of last year, the Fed found that Americans owed $870 billion in student loans and borrowers age 60 and above accounted for 5% of that overall figure, while those fifty and above accounted for 17%.

What we are talking about is essentially three groups of seniors—two of whom you already mentioned.  There are those who are dealing with their own loans from their college years.  There are those who are dealing with new loans which they may have taken on to go back to school later in life to improve their job prospects.  And there are those who have co-signed loans for children or grandchildren who needed help.

What can be done to help them?

Well, I think a lot of it is going to come down to changing our perspectives about what is an acceptable burden of debt to take on for a college education.  That clear connect between getting that degree and then getting a good, solid job that leads to a prosperous career just isn’t there anymore.  The recession has just blown that up, as has the escalating cost of college.

The value that we’ve all assumed came with a college degree simply isn’t there.  Now you have some law-makers and consumer advocates pushing to make sure private student loan debt can be discharged in bankruptcy.  There are others who argue the real issue is reigning in the escalating cost of college.

I don’t know what the final resolution will be, but I think families have to be willing to make tough decisions about the kinds of schools their students can afford.  I want my daughter to go to the college of her dreams, but not if it means she’s going to be plagued by a nightmare of debt for thirty years.  We need to make realistic assessments of what is affordable and what is not, based on what kind of degree our children will graduate with and what kind of job market they can realistically expect to face upon graduation.