How Student Loan Debt Could Follow You For Life

BreakingModern – Student loan debt is following an increasing number of Americans into retirement. Rosemary Anderson, a California resident, amassed $64,000 in student loan debt when she was in her thirties and pursuing her graduate degree. Now 57, Anderson anticipates that she won’t have the loan completely paid off until she’s 81.

Anderson spoke to Congress in September in the newly formed U.S. Senate Special Committee on Aging to address the problems of graying Americans. One of the surprising findings is that crushing student debt is not exclusive to the young.

Since graduating, Anderson has suffered through many common setbacks that come with life: a divorce, health issues and loss of employment. She hasn’t been able to pay anything toward her student loan in eight years and it has since nearly doubled to $126,000.

Like Anderson, many older Americans have returned to school to improve their income, but find the opposite has occurred. Either the job is not there when they graduate or there is not an immediate promotion and bump in pay at their current job. Older Americans have the added burden of absorbing debt brought on by their children, who they’ve likely put through school, and can’t begin to pay off their own student loan debt.

“I find it very ironic that I incurred this debt as a way to improve my life, and yet I still sit here today because the debt has become my undoing,” Anderson said in prepared testimony for the hearing.

Student Loan Debt Statistics

Image Credit: Dino Londis

According to a report issued by the committee, the amount senior citizens owe in outstanding federal student loans has increased six-fold, from $2.8 billion in 2005 to more than $18 billion last year.  While older Americans still account for a small fraction of student loan debt holders, the report noted that the number of seniors facing student loan debt between 2004 and 2010 quadrupled to 706,000 households.  Roughly 80 percent of the student loan debt held by retirement-aged Americans was for their own education, while only 20 percent of loans taken out went to help finance a child or dependent’s education, the report said.

According to the Brookings Institute – which compiled data from 1989 to 2010 – roughly one-quarter of the increase in student loan debt since 1989 can be directly attributed to Americans obtaining more education, especially graduate degrees.  The average debt levels of borrowers with a graduate degree more than quadrupled, from just under $10,000 to more than $40,000.

Yet the Brookings report finds that the burden to households which have accumulated student debt may be overstated. It concluded that the increases in the average lifetime incomes of college-educated Americans have more than kept pace with increases in debt loads. Between 1992 and 2010, the average household with student debt saw an increase of about $7,400 in annual income and $18,000 in total debt. In other words, the increase in earnings received over the course of 2.4 years would pay for the increase in debt incurred.

The authors of the Brookings report are looking at the macro picture. For people like Rosemary Anderson, it offers little solace.

For Bmod, I’m .

Header and Featured Image Credit: Graz University-Library reading-room” by Dr. Marcus Gossler - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

Dino Londis

Author: Dino Londis

Based in New York, Dino Londis is a senior commentator at aNewDomain.net and BYTE. Follow @dlondis on Twitter.

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