Older people outnumber younger people with student loans, and they owe far, far more.
A common popular belief about student loans is that they are a young person’s problem. We assume that, by and large, most borrowers are able to have their loans repaid by their mid-30’s. Sure, there may be a few stragglers who take until their 40’s or even beyond to repay their loans, but the conventional wisdom is that people 50 or older who haven’t yet been able to repay their loans are the outliers. The exception to the rule.
Well, it turns out that this is completely wrong.
This is Department of Education Data for the fourth quarter of 2020. For comparison purposes, we combined the source data to find statistics for the 5th, 6th, and 7th rows, and the reader can verify the calculations from the data shown.
- There are more people over the age of 50 with student loans (8.7 million) than people under the age of 25 with student loans (7.8 million), and they owe, on average, far more ($41,058 compared to $14,807).
- There are more people over the age of 35 with student loans than under the age of 35 (22.7 million vs. 22.6 million), and they owe far more on average ($41,881 vs. $27,256).
A 2014 GAO Study found that among student loan borrowers 75 years of age or older, more than 50% were in default. For people between 65–74 years of age, this was 27%. We also know that about 20% of defaulted borrowers “rehabilitate” their loans into new, much larger, undefaulted loans (that, incidentally, have a 75% chance of defaulting again). Given this, it is no stretch to say that the majority of senior citizens with student loans in this country are in default. Along with the standard, humiliating collection practices they are subject to, they also are having their social security and disability income garnished. Obviously, the vast majority of these seniors will never be able to pay off this debt.
Some might suggest that Parent Plus Loans- a relatively new form of federal student loans where parents can borrow to pay for their kid’s college- explain this fluke in the statistics. But these loans only account for about 6% of all federal student loans ($100.6 Billion over 3.6 million borrowers), and subtracting these completely from the “over 34” data (the appropriate age group for these loans) actually increases the average student loan debt of the remaining borrowers in this age group (from $41,881 to $44,507). So Parent Plus Loan debt serves to decrease- not increase- the average indebtness of this age group.
A key observation: People over the age of 50 typically went to college in the 60’s, 70’s, 80’s, and early 90’s. They borrowed very small amounts compared to today’s students. They they now, today, carry triple the loan balances of recent graduates is clear evidence that their loans have increased dramatically from what was originally borrowed- often despite having made payments- sometimes many multiples of whatever was originally borrowed- over decades of being stuck by the predatory trappings of this lending system. This is a direct result of both bankruptcy protections, and statutes of limitations having been stripped uniquely from federal student loans.
This lending system has gone horribly awry. In the absence of both bankruptcy protections and statutes of limitations, these loans have become viciously predatory, hyper-inflationary bonds of indenture for all borrowers. And now the data speaks for itself: older people are being exploited under these unconstitutional loans en masse, and they are being hurt far worse than younger borrowers.
This is wrong. Wrong on every level. This is not what the architects of the Higher Education Act in 1965 had in mind when they launched this lending system. They originally declared that the loans would be “free of interest”, but today, $100 Billion in interest alone is added to the citizen’s student loan debt.
What kind of a country does this to its citizens of any age? More to the point: what kind of country does this to its seniors?!
The lending system is both nationally threatening- and by every rational metric- catastrophically failed at this point in time. Too many lives have been crushed, and too many are now under imminent threat for this lending system to be allowed to continue. It is time to cancel all federal student loans, remove this threat, and replace it with a more fair, rational, just, and less expensive and socially damaging way to fund higher education in this country. This will wait no longer.
President Biden is obligated to issue an executive order on day one as President returning bankruptcy protections to the loans. He should not stop there. He should cancel all federal student loans, suspend the lending system indefinitely, and use the time afforded by this pandemic to replace it.
If you agree, please sign and share this petition.