By the time you reach 60, retirement is, ideally, around the corner. People are saving for their golden years, not paying off debt. Unfortunately, new research shows that many senior citizens today are still paying off their student loan debt.
Playing golf, mingling with grandchildren and planning for retirement should be the main things on seniors’ minds. But new research from the New York Fed shows that Americans “60 years and older owe a collective $36.5 billion in outstanding student loans.” And it get’s worse—10 percent of these indebted seniors are delinquent on their loans. This means that a portion of their Social Security checks will more than likely be used to “satisfy their decades-old debts,” according to the Washington Post.
Student loan debt is classified as a unique form of debt that, apparently, can’t be discharged through bankruptcy. Since this form of debt is attached to a person for life, it is affecting important financial planning and saving for many Americans. While student loan debt originates, primarily, when people are under 40—it’s not getting paid-off before people reach retirement age. With today’s depressed economic market, in tandem with a record number of aging baby boomers approaching their golden years, this creates a problem. People think that college will bring them more money that will pay for these exorbitant debts. But, unfortunately, this isn’t the case, in many instances.
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The average amount due from all student loan borrowers is $23,300, and the median amount is $12,800, New York Fed data reveals. And statistics show that, on average, college graduates make significantly more over their lifetimes than high school graduates and face a lower unemployment rate. However, college costs have reached a record high and there are many variables that determine whether a person will pay off all their debt, including the following:
People think they can go to college, get an education and, in-turn, get a good-paying job that will take care of any financial woes accumulated along the way. This simply isn’t so. And, unfortunately, this misinformed belief has created a vicious cycle for many Americans who had the best intentions when they started their college journey.
It’s safe to assume that just because you go to college and get an education, you may not be able to pay-off your debt in a timely manner; especially if you don’t have a strategic, informed approach. This so-called ‘college affordability crisis’ is a real problem we face today. People need to be more savvy about financial ramifications that can occur from the different types of debt—a lesson that America has, unfortunately, learned the hard way.
Seniors should have a different focus in their evening of life than paying off old student debt. Contacting a financial planner, at any age, is a smart move. But if you’re approaching retirement and don’t feel you have a grasp on your finances, it’s definitely a good idea.