The number of older Americans taking on student debt on behalf of their children and grandchildren has quadrupled in the past decade, with consumers over 60 now holding $66.7 billion in student loan debt, according to a new report by the Consumer Financial Protection Bureau.
The Washington Post reports the skyrocketing cost of college has placed a particular burden on older Americans, many of whom are struggling to pay back growing debts in their retirement years. Nearly 40% of federal student loan borrowers over age 65 are in default, the highest rate for any age group, the data show.
Americans owe nearly $1.4 trillion in outstanding student loans. A slow job market recovery, growing income inequality and stagnant wages have made it difficult for younger Americans to be economically independent, and now there are signs that those financial struggles are dragging down their parents and grandparents as well.
Increasingly, older borrowers are being taken by surprise by student loan debt, according to financial advisers. Often parents and grandparents co-sign loans—the majority of student loans are co-signed by people age 55 and up—assuming they’ll be off the hook once the borrower graduates from school and lands a job. But increasingly, that not the case.
And a growing number of borrowers over age 65 also say their Social Security benefits—often the only source of regular retirement income for older Americans—had been seized because of unpaid student loans, the report says. Those with student loan debt also had less money saved for retirement than their counterparts without student debt did.
“What we started to see in 2008, 2009, during the recession, is that the jobs just aren’t there for young graduates,” says Mark Stinson, a senior advisor for FAI Wealth Management in Columbia, Maryland. “What that means is that parents and grandparents are unwittingly taking on their debt—and that’s a position a lot of people just weren’t expecting to be in.”