Report Finds More People Over 60 Struggling To Pay Off Student Loans
KELLY MCEVERS, HOST:
Student loan debt is not just an issue for young people. A new report from the Consumer Financial Protection Bureau says that in the last decade, the number of older Americans - 60 and up - with student loan debt has quadrupled. And many of those older people who are often on fixed income struggle to make loan payments. They default at a higher rate than any other age group.
With us to talk about this report is Seth Frotman, the CFPB student loan ombudsman and head of the CFPB's office for students. Welcome to the program.
SETH FROTMAN: Thank you so much for having me.
MCEVERS: So how much do these older Americans owe? And what do we know about where these loans came from?
FROTMAN: So we are talking about billions of dollars that older Americans now owe on student loan debt. The bureau estimates that number is around $66, $67 billion in the aggregate. But for individual borrowers, what we've seen is a near doubling, jumping from around $12,000 to nearly $24,000.
And while some of this debt stems from them taking out, you know, a student loan for themselves, the overwhelming majority now come in the form of cosigning where a parent or grandparent is actually taking on debt on behalf of their child or grandchild.
MCEVERS: For older Americans who are making the payments but struggling to do that, how are they doing it?
FROTMAN: Sure. I mean I think this is one of the real challenges and one of the things we highlight in our report. You know, the bureau documents how older borrowers are more likely than those with outstanding student debt to skip health care expenses like prescription drugs or doctor visits. Those borrowers with student loan debt tend to have less money in their retirement account.
So it really runs the gamut of borrowers. It's not necessarily just those in default that are struggling but also, you know, borrowers just struggling to make their payments.
MCEVERS: And we also just want to be clear, too, that this kind of debt is not the kind of debt that can be erased by, say, declaring bankruptcy. Is that right?
FROTMAN: Absolutely. So one of the things that this report highlights is the growth in the number of social security recipients who are actually having their social security garnished because of student loan debt, a fact that is particularly concerning when you know that 69 percent of social security recipients - that is their only source of income.
MCEVERS: Can people get the payments lowered?
FROTMAN: This is something that we really wanted to highlight. One of the challenges that the bureau sees across the student loan market is despite the availability of federal consumer protections that allow student loan borrowers to pay an amount that is in line with what they can afford, what we see is the most vulnerable borrowers - and that definitely includes older borrowers who are struggling under the weight of student loan debt - reaching out to their student loan company and continuously getting bad information, no information despite the fact that they should be able to get into these affordable repayment plans.
MCEVERS: And what about for people out there who are thinking about cosigning on their child's student loan? I mean that's where a lot of this comes from, right? What advice would you give that parent?
FROTMAN: So I think the first advice is to ensure that, you know, they could make the payment should their child or grandchild be in a position where they can't pay. But another issue that's important is understanding how and then they might be able to be released from being a cosigner.
So for quite a number of private student loan companies, they actually allow the borrower to apply to have their cosigner be released from the loan after making a certain number of on-time payments or other requirements. And I think one of the things that the bureau has highlighted for years now is that far too often, cosigners who are trying to get released are running into roadblocks and unnecessary hurdles in that process. So you know, we urge primary borrowers and cosigners to really understand the aspects of that key consumer protection.
MCEVERS: Seth Frotman, the Consumer Financial Protection Bureau's student loan ombudsman, thank you very much.
FROTMAN: Thank you.
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