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Know your loan details and loan servicer

Know your loan details and loan servicer

When many people think of defaulted student loans, the image that first comes to mind is of a young person not long out of college.

But government data show that a growing number of boomers and retirees are suffering under the weight of student loans they can’t afford to repay.

According to a 2017 report from the Consumer Financial Protection Bureau (CFPB), the number of people 60 and older with student loans quadrupled from about 700,000 to 2.8 million individuals between 2005 and 2015. The average debt owed by older borrowers also nearly doubled during that time, going from $12,000 to $23,500.

Most older people borrowed for college or cosigned student loans on behalf of their kids and grandchildren. But some Americans 50 and older took on debt to finance their own education or help a spouse earn a degree. Many of them now are having trouble meeting their financial obligations. Since 2015, nearly 40 percent of federal student loan borrowers 65 or older are in payday loan companies in Clark NJ default, the CFPB says.

Even worse: A growing number of older borrowers have had a portion of their Social Security retirement or disability benefits seized for nonpayment of federal student loans.

The Government Accountability Office (GAO) recently reported that 114,000 older borrowers suffered such garnishments in 2015. The typical garnishment was just over $140 a month. And nearly half of defaulted borrowers were subject to the maximum garnishment, or 15 percent of their Social Security benefit.

“America’s older consumers do not deserve to have their proverbial golden years tarnished by heavy student debt or have their Social Security benefits reduced for trying to help a younger family member get a college education,” says Robin Howarth, a senior researcher with the Center for Responsible Lending.

Bone up on loan modification options

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You may be able to modify unmanageable loans and temporarily reduce your payments through a deferment or loan forbearance.