Student Debt an Issue for Many Retirees
PUBLISHED BY: LFN Primary
Virginia Beach, VA (Law Firm Newswire) December 18, 2015 – It is generally assumed that student loan debt is a problem faced only by the young. However, that is not always the case.
Seniors are increasingly having a difficult time paying off their student loans, even to the point at which their Social Security benefits are offset when they are unable to make payments.
According to the Government Accountability Office (GAO), in 2010, four percent of Americans ages 65 to 74 had federal student loan debt. This represents an increase of one percent from the year 2004. The collective amount of student debt rose from approximately $2.8 billion in 2005 to about $18.2 billion in 2013.
The GAO discovered that approximately 80 percent of education debt carried by seniors had been applied to their own education, and the remainder had been borrowed for their children. It stated that federal data indicated that seniors were more inclined to default on loans for their own studies in comparison to those they took out on behalf of their children.
“Many seniors can benefit from advice concerning investment products so that they will not find themselves in the position of having to delve into their benefits to pay their education debt,” said Andrew H. Hook, a Virginia elder law attorney with Hook Law Center, with offices in Virginia Beach and northern Suffolk. “Proper investment planning can assist them in making wise decisions regarding their financial assets.”
It has not been determined when the loans originated, but the GAO said that the time range for paying off student loans can be 10 to 25 years. That implies that a number of seniors could have borrowed funds for their education at a much younger age or after having worked for some time.
From 2002 to 2013, the number of seniors whose Social Security benefits were offset to make payments on their student loans, grew approximately five times, from 31,000 to 155,000. Approximately 25 percent of student debt carried by seniors ages 65 to 74 was in default. The government can recover student debt by making deductions from one’s compensation or collecting tax refunds.
The GAO said that as baby boomers transition into retirement, the number of seniors who default on their loans will continue to rise, and if their Social Security benefits are offset, they will be forced to confront the possibility of a retirement that is less certain.