However, there's another group of debtors—Americans over 55 who are getting close to retirement—who are frequently disregarded and have their own unique set of difficulties. (Photo : Mikael Kristenson / Unsplash)
Almost 2.2 million adults over 55 had outstanding school debt in 2022, according to the Federal Reserve Board's Survey of Consumer Finance. These older workers and unemployed individuals fear their ability to retire comfortably may be hampered by the loans they took out years ago.
Government data shows employees aged 55 to 64 take an average of 4.5 years to repay college debts, while those 65 and older need only 3.5 years.
About 43% of all student loan debtors over 55 have middle-class incomes, but half earn less than $54,600 annually, making it difficult to save for retirement due to a significant portion of their income being allocated to repaying student debts.
All too often, graduates starting their professions with a college degree also have student loan debt. However, there's another group of debtors-Americans over 55 who are getting close to retirement-who are frequently disregarded and have their own unique set of difficulties.
Data from the Federal Reserve Board's 2022 Survey of Consumer Finance show that almost 2.2 million adults over 55 had outstanding school debt. A recent study from The New School's Schwartz Center for Economic Policy Analysis claims that these older workers and jobless individuals fear their ability to retire comfortably may be hampered by the loans they took out years ago.
According to government data, it takes employees 55 to 64 years on average to pay back their college debts, but those 65 and above only need 3.5 years.
As more people begin to doubt the value of a college education, the study is released. According to a recent Pew Research Center survey, just around one in four Americans think a bachelor's degree is required to get a good job.
43% of all student loan debtors over 55 have middle-class incomes, according to statistics from the Schwartz Center. According to the survey, half of debtors who are still employed and over the age of 55 earn less than $54,600 annually, placing them in the lowest income bracket.
Due to their comparatively low salaries, the latter group finds it difficult to save for retirement since they are severely impacted when a percentage of their income is allocated to repaying student debts.
Financial Vulnerabilities of Older Student Borrowers
A smaller percentage of older student borrowers drop out of school, which puts them in an even more vulnerable financial situation. They have to pay back the debts not only as agreed upon, but also without the advantage of the so-called "sheepskin effect," which is the higher earning potential that most jobseekers associate with a college degree.
According to the research, about 5% of workers aged 55 to 64 and over 17% of workers aged 65 and beyond had not finished the degrees for which they had taken out loans. In addition to having debt, these older workers have less earning potential.
The authors of the research contend that these effects can be lessened by implementing policy changes like debt forgiveness, simpler debt repayment, or prohibiting Social Security payments from being garnished in order to pay off college debts.
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