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In Spanish | The student debt crisis is not just a problem for young people. Of the $ 1.6 trillion in total student debt at the end of 2020, borrowers aged 50 and over owed about 22% of that amount, or $ 336.1 billion, more than five times more than 2004.

Growing problem

The crisis has been tough on older households. In 1989, 3.1 percent of families headed by someone 50 and over had student debt, owing on average $ 10,073. In 2016, 9.6% of families headed by someone aged 50 and over had student loan debt, the average amount owed more than tripling to $ 33,053.

The combination of stagnant salaries and skyrocketing tuition fees is one of the main reasons student debt has become such a burden. “Over the past three decades, the cost of attending four-year college has more than doubled, even after adjusting for inflation, as public and local funding for higher education per student has declined,” AARP CEO Jo Ann Jenkins said in 2019. “Family incomes do not come close to matching this increase. “

Most older Americans took on debt because they wanted to upgrade their skills and get a promotion or a higher salary. Others decided to go back to school to change careers. And still others are forced to take out loans that pay for their children’s education, either by taking out PLUS loans – federal money borrowed by parents – or by co-signing other debts with private lenders. About 25 percent of borrowers aged 50 or older make repayments on private student loans because the student did not.

Heavy debt

The median student loan payment – half is higher, half is lower – is $ 222 per month, according to the Federal Reserve. The average payout is $ 393.

While this amount may seem reasonable for a loan repayment, it can be particularly burdensome for low-income borrowers, who often struggle to repay their student loans. For retirees, this can be a particularly difficult problem. The average Social Security retirement benefit is $ 1,543 per month: for 1 in 4 seniors, Social Security accounts for 90% of their income.

Student loans, unlike most other forms of debt, generally cannot be discharged in bankruptcy, and the government can garnish your salary, as well as up to 15% of your Social Security benefits, for repayment. federal student loans. In fiscal 2015 alone, nearly 114,000 borrowers aged 50 and over saw Social Security benefits seized to pay off delinquent federal student loans, according to a 2016 report from the Government Accountability Office. Half of them were receiving Social Security disability benefits.

Student loan repayments can also reduce retirement savings, according to the Employee Benefit Research Institute (EBRI), especially for those who took out loans but did not complete college. “These families end up with the costs, but not the benefits of attending college,” Craig Copeland, senior research associate at EBRI, said in a press release. A 2019 AARP analysis suggested that borrowers who wait to start saving for retirement because of their student loan debt will need to work two to seven years longer to achieve the same account balances as their debt-free peers.