Private Student Loan Relief: Why are Seniors Struggling?

by | Mar 4, 2021 | Private Student Loan Help, Student Loan Help

As of 2020, Americans owe over $1.7 trillion in federal student loans, a 104% increase in the past decade. In addition to this, there are about $133 billion in outstanding private loans. For many, it’s causing growing financial distress and creating an increasing amount of default among borrowers

Perhaps the most surprising aspect of the student loan crisis is the growing number of seniors being crushed under the weight of this debt. The American Association of Retired Persons (AARP) calls this an “intergenerational problem” affecting the elderly more and more.
A 2019 AARP report reveals that “Fifteen years ago, borrowers in this age group accounted for $47 billion of the nation’s student loan debt. By last year, that figure had grown to $289.5 billion.” Education Data reports that “Borrowers over the age of 60 increase student debt among their age group by 50% every five years.”
As such, the need for both federal and private student loan relief that focuses on seniors’ specific needs is becoming more apparent. The good news is that there are an increasing amount of resources, such as helplines, that can guide you towards the financial help you or an elderly loved one needs. In fact, you can get immediate help by calling the Private Student Loan Relief Helpline at (888) 669-1064 to speak with a trained counselor who can go over available loan relief options.

In the meantime, here’s what seniors need to know about student loans and potential avenues of relief.

Why is Student Loan Debt Growing Among Seniors?

Helping others

Even though there was a time when baby boomers bragged about going to college for little to nothing, it’s a curious phenomenon to see so many of them drowning in student loan debt.

Why? One reason for the rapid increase in student loan debt among America’s aging population is their penchant for helping everyone from their children, grandchildren, extended family, and even friends.

Some seniors borrow directly for those they are helping. Some are simply cosigners for others. When the primary borrower defaults, they end up being responsible for payments. If they are helping many people in their circle, you can see how this well-meaning “generosity” could snowball into a real financial disaster.

The young are getting older

Student loan debt became more widespread in the late 80s. As those students begin to age, they are nearing the 50+ age demographic now burdened more with student loan debt. Simply put, it’s the passage of time shifting the demographics of student loan debt onto older Americans.

Advanced degrees and continuing education

Baby boomers who had escaped the initial trend of borrowing for college may have been ensnared with the rise of for-profit-colleges and advanced degree programs. They could have been participants in these educational programs or supporters of someone who was.

The rising cost of college

The cost of college has far outpaced other goods in terms of inflation. According to a CNBC article written in 2019, the cost of college has increased 25% in the last 10 years. In the last 50 years, the cost of college tuition has increased by over 3,000%!
The increased cost of tuition is compounded by the fact that people tend to hold on to student loan debt longer than any other type of debt. Compounding interest, over longer periods of time, causes student loan balances to grow at faster rates.
Finally, many unethical practices have been uncovered in recent years with certain for-profit-institutions. A number of investigations revealed that scores of privately-owned educational institutions were charging students exorbitant prices for their programs.

In exchange, students were left with large loans, some federal and some private, for degrees that weren’t very marketable. Though some fraudulent programs were shuttered, and some loans forgiven, the vast majority of people are still paying those loans today.

What kind of private student loans do seniors have?

Private student loans make up about 10% of all student loans. There are different ways that student loan debt can be obtained with a private lender including:
  • Directly with the learning institution
  • Personal loan
  • Credit card
  • Car title loan
  • Home equity line of credit or home equity loan
  • Being a cosigner on a private loan in any one or more of these forms

What are seniors struggling with when it comes to private student loans?

Perhaps the most telling sign of student loan debt problems is the number of people missing payments and in default. In 2015, AARP’s student loan report shows that as many as 37% of student loan borrowers over the age of 65 were in default.
For older borrowers, this can present many challenges and adverse effects on their sources of income. Possible repercussions of defaulting on loans could include wage garnishment, offsets of federal tax refunds or Social Security payments, or derogatory credit reporting.
At a time when people should be focusing on saving for retirement or preparing for imminent retirement, they are instead burdened with excessive debt. This will inevitably impact their quality of life sooner than later and even how their retirement years will pan out.

What are some private student loan relief options?

Unlike federal student loans, there are no forbearance, deferment, or income-based repayment options for private student loans. There are, however, plenty of strategies that you can explore to reduce or eliminate high student loan balances. These strategies can work for people of any age, but some might be better suited for those who are older or nearing retirement age:

  • Debt consolidation
  • Debt settlement
  • Bankruptcy
  • Reverse mortgage
  • Pension advance loan
  • 401(k) or 403(b)
  • Exploring the statute of limitations on some private loans
  • Be removed as co-signer (if criteria are met)

This is not an exhaustive list of potential remedies for student loan debt but it’s a good start to give you hope as you seek out help. If you or a loved one would like more information on tackling your private student loan debt, call the Private Student Loan Relief Helpline at (888) 669-1064 where a trained counselor can go over available loan relief options.

Aja McClanahan is a blogger, freelance writer, and book author who covers personal finance and small business topics. She resides in Chicago with her two children and husband.