 For some of us, that meant closer to our proposed
retirement years. For some older adults (60 and over), the realities
of carrying student loan debt continue to increase. A report from
the Consumer Financial Protection Bureau (CFPB) indicated that
consumers 60 and over were the fastest growing student loan
borrowers between 2005 and 2015, and the amount this population owed
had doubled over the ten years. Older adults borrow to cover their
educational expenses and to serve as co-signers on loans for their
children, grandchildren, and other loved ones. The CFPB report also
indicated that the majority (approximately 73 percent) of student
loan borrowers over 60 years older reported that the debt they carry
is for their children and grandchildren.
While student loan debt among all borrowers affects future financial
decisions, there are additional effects for older adults. Therefore,
whether you become a co-signer on loans or borrow to cover your own
educational expenses, it is important to understand the terms and
conditions of the loan you are attaching to your credit information.
Co-signer
For some older adults, the main way to support their
children/grandchildren's future is to co-sign on their student
loans. When you co-sign on loans, you agree to take on the full
responsibilities of repaying that loan if the primary borrower
defaults on payments. Another important consideration relates to the
type of loan (federal versus private). Students can apply for
federal student loans from the government. There are needs and
non-need based types of loans, but these are distributed on a
first-come, first-serve basis. This should always be the first
option for your student if they are eligible, as private loans
typically require a co-signer. For older adults co-signing on a
student loan, think about possible changes in lifestyle and other
things that may affect your living situation. For example, retiring
early or being on a fixed income during retirement. Co-signing on
loans also means that the information will be on your credit report,
which affects future loans (e.g., replace a car, taking out a new
credit card).
[to top of second
column] |
 What about me?
Borrowing to cover your educational expenses is a familiar route
that many students take to continue their education. For older
adults, having a reasonable repayment plan, which includes a time
frame, and loan details allow them to plan for the unexpected.
Below are some additional
considerations:
• Do not risk or sacrifice your retirement savings, emergency
savings, or risk adding multiple equity loans to your home.
• Make sure that if you are looking into loan options, that you are
seeking information from the right sources such as the student loan
office/officers at your educational institution.
• Consider how student loan repayment may affect your social
security and other benefits have or will receive.
• Different health-related concerns can affect your financial life
and ability to repay student loans. Planning for emergencies helps
protect against financial shock.
In summary, student loan debt among older adults has grown
significantly over the past few years. Older adults are taking on
debt to pay for their children's education as well as cover the cost
of their educational pursuits. As the amount that older adults
increases, it is important to consider the long-term implications of
having student loan debt into or close to retirement.
This article only provided a brief overview of the impact of student
loan debt on older borrowers. To read the full report, please visit
the CFPB website
https://files.consumerfinance.gov
/f/documents/201701_cfpb_OA-Student-Loan-Snapshot.pdf.
[Camaya Wallace Bechard, Consumer
Economics Educator, University of Illinois Extension]
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