mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
Student Loans’ Latest Victim: Parents


Total student loan debt is now more than $1 trillion and rising, and parents of students, many of whom are a decade or less from retirement, are finding themselves on the hook for an increasingly large portion of that total. The Deseret News:

Borrowers who are age 60 or older are the fastest-growing age group for student debt, according to the Federal Reserve Bank of New York. Their numbers have tripled since 2005, and 12.5 percent of their student loans are delinquent. For these borrowers, retirement can mean fielding creditors’ insistent phone calls while living on a fixed income that won’t ever cover the bills. It can mean having Social Security payments garnished to service student loan debt.

As the Financial Times notes, the problem has gotten so bad that parents are beginning to take out life insurance policies on their adult children to protect themselves in case their children die before they pay off their loans.

An even better option than life insurance would be to do a little more bargain hunting. The Guardian reports that 41 percent of Americans are considering attending less selective but cheaper schools to minimize their debt. This number should be higher. There are plenty of less-selective schools that still offer a quality education, and graduating with low or zero debt may be at least as important as a name-brand degree.

[Ball and chain image courtesy of Shutterstock]

Features Icon
show comments
  • Anthony

    Preach on Professor! The higher education industry in America is disaster. My heart breaks – no joking – when I think of the millions of poor young people who will be paying back their students loans with small pay checks for the rest of their lives. The situation is so bad for some – think law students – that it is quite possible that their social security payments will be garnished to pay for their outstanding student loan debt fifty years from now. Financially, these people have been destroyed. Even with a good work ethic and a positive attitude, it is difficult to see how somehow is going to pay down 200k in debt with an income below 40k per year. And that is assuming that these folks will get any job. And I say this as someone with no student debt.

  • Greg Olsen

    Selecting more inexpensive schools is one thing. How about a little ambition in the subject studied? Too many students select majors that prime them for cashier at McDonald’s, because they are easy. Take the hard classes, learn something. I double-majored in a liberal art and a science, precisely because I needed technical skills, but still wanted to study ancient Near Eastern languages. I took excess loads but I did graduate on time. It can be done. In the private sector there are two classes of worker who matter, the people who make things and the people who sell things. STEM and Communications or Business (if you’ve got the extraverted, risk-taking personality profile to be a salesperson) are your best paths to prosperity.

  • Anthony

    The cost of university education in the U.S. has risen more than 40% in the past decade and there is 1 trillion dollars in outstanding student debt (Consumer Financial Protection Bureau). The Federal Reserve lists it as 2nd largest source of consumer debt. And it piles on WRM.

  • Jim Luebke

    How did the system ever get so desperately backwards that a loan intended to be paid off by a young professional ends up being paid off by a retiree??

    Oh, wait. People tried to extend credit to people who aren’t creditworthy for purposes that are uneconomic, and got the banks to buy in by suspending traditional bankruptcy protections.

    “What could go wrong?…”

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service