Student debt now affects a staggering number of elderly Americans


#1

Student debt now affects a staggering number of elderly Americans

The number of older Americans taking on student debt on behalf of their children and grandchildren has quadrupled in the past decade, with consumers 60 and older now holding $66.7 billion in student loan debt, according to a new report by the Consumer Financial Protection Bureau.

The skyrocketing cost of college has placed a particular burden on older Americans, many of whom are struggling to pay back growing debts in their retirement years, the report said. Nearly 40 percent of federal student loan borrowers 65 and older are in default, the highest rate for any age group, the data shows.

“Student loan debt is clearly an intergenerational problem, and what we’re seeing is that this is unfortunately putting older consumers’ retirement at risk,” said Seth Frotman, assistant director of the bureau’s office for students. “Older Americans are struggling under the weight of student loan debt.”

Americans owe nearly $1.4 trillion in outstanding student loans. A slow job-market recovery, growing income inequality and stagnant wages have made it difficult for younger Americans to be economically independent, and there are signs that those financial struggles are dragging down their parents and grandparents as well.

“A large portion of older student loan borrowers struggle to afford basic needs,” the report said, adding that older borrowers were increasingly likely to have skipped necessary doctors’ appointments and prescription medications because they couldn’t afford them.

stltoday.com/business/local/student-debt-now-affects-a-staggering-number-of-elderly-americans/article_cec0befa-0988-5bd0-a256-40515832c0c4.html

I tend to side with the Trump admins view of a repay program for student loans to be around 12 percent of income earned for 15 years. It beats people working to defer loans or paying minimums and remaining in debt for too long - not paying off the principle.

It’s sort of an investment program. Some will return more than others.

Trump said in an October speech in Columbus, Ohio, that he’d replace the current maze of plans with a single program. The plan would limit student loan payments to 12.5 percent of income, slightly higher than REPAYE’s cap, and forgive the remaining balance after 15 years, five to 10 years sooner than the current options offer.

foxbusiness.com/markets/2016/11/29/ask-brianna-will-trump-hurt-or-help-my-student-debt.html

Any thoughts?


#2

We’re going to have to solve the root problems of the cost of education.

It may work to go into lots of (although not seemingly infinite) debt for STEM students who can repay some of that back, but for others, it’s a big problem.

One of the things is students need to be educated on which majors and type of schooling will get them good jobs and what to honestly expect.

It’s clear that many students are not making good decisions, and it’s partly because they have no financial responsibility in school. Most students don’t even “pay” for school as older people understand it—the money goes directly to the office of financial
aid or comes from them via the government.

Basically all the student has to do is sign the papers, show up for class or just pass.

Besides, many colleges in the US have become nothing more than football-stadium/basketball arena fundraisers, social engineering experiments and a way for certain savvy folks to get government-esque golden parachute sweetheart deals.


#3

This whole debt problem is caused by easy money from the government which is available to just about anyone. It’s the same root cause of the housing collapse…easy money backed by federal entities. The difference being the way loans are structured and who stands to lose when payments on loans are not made. The student loan system should have collapsed years ago, but the losses are not felt by the colleges; or in any local community like in the housing collapse. There is no “return on loss”, no skin in the game for colleges, no shared risk like there is with the housing market.


#4

I agree that students need to be more educated about money and financial responsibility. They need to be more careful about the kind of loan they take out, public vs. private, and how many loans, as well as credit cards. High school and college should have practical courses on money management, and parents should also do their share if they know how and are good role models with regard to money. Many may not be.

Your last paragraph, which touches on other issues regarding colleges, is worthy of a thread of its own.

Finally, the modern-day culture, which consists of greed and overspending, is also partly to blame for students’ bad decision-making when it comes to money matters.


#5

Why is it so expensive? If an American was to move to the EU for uni (and therefore be paying full overseas fees as opposed to EU resident fees which are 2-3 times less), it would still be cheaper than many educational institutions in their home country.


#6

Speaking as an owner degree related to the “S” in STEM, I can honestly say that’s no guarentee of employment either. I would be interested to know whether the average income of a science degree is any higher than an arts degree. Most science students that I have met seem to have dismal job prospects, forcing us to fight and struggle for an increasingly more competitive professional degree programs. Technology and Engineering are still good, so I’m told, but even those markets are moving towards saturation. I’m wondering what would happen to TEM job prospects if the market suddenly became flooded with even more students.

I should say this is all anecdotal, and I don’t have the stats to back any of this up so take that with a grain of salt. I suspect, however, that if you flooded the market with more STEM students you would have a situation similar to Law where it remains lucrative for top tier schools (your MITs and Cal Techs) and a complete waste of money for lower tier facilities.


#7

Why wouldn’t it be expensive?

Once again, the federal government involved itself and made things worse. Once universities were informed that the federal government would begin backing all student loans and guaranteeing them, how could anyone not imagine the cost would skyrocket? They know regardless of cost, the feds are good for the money.

These places have to by necessity, have business models to survive. They knew once the feds got involved that their was little incentive to control costs, especially as a way to compete with other school.

Would it be nice if every institution in the world was 100% altruistic? Of course. But that isn’t reality.


#8

Sounds like a lot of people made bad financial decisions and counted their chickens before they hatched. I’d be ashamed to have put my parents or grandparents in such a situation. But they should have known better.


#9

I can feel bad about you people who do foolish things with money, but the elderly have had 60+ years to learn about managing money. If they can’t figure out how to make wise decisions with money, I am not sure that there is much else we can do.


#10

Is it any wonder that young people make foolish choices with money when they could not possibly have learned better from the example of their elders? I was still in grade school when I learned that education was not free. It is one of the reasons why Catholic school students graduate from college at higher rates than public school students.

It is human nature that we do not appreciate what we get for free as much as something we have to earn. The whole concept of sacrificing for a better future is mocked it much of the advertising we see constantly. “I want it all and I want it now” is not a formula for success in anything. The debate between Bernie Sanders and Hillary Clinton over who would give out more freebies for students was a recipe for even more disasters, but it did get them a lot of votes from young people with a sense of entitlement.


#11

Part of the issue for STEM grads is competition from countries like India, that is producing high numbers of STEM grads too…willing to work for a lot less than Americans.

I also agree with your last paragraph as well. I think anybody shopping for a college should look at how well their grads get placed into jobs. There are lots of colleges offering STEM degrees, but a diploma from one of them will vary greatly in value.


#12

I have student loan debt that currently hovers around $9k. There are lots of problems…

  • Universities try to sucker you into borrowing more than you need. My last full year of college was $10k. When dealing with the bursar’s office to borrow/pay, I was “cheerfully encouraged” to borrow a lot more than what I needed for tuition. That perhaps I needed spending money or some money to buy a new MacBook with. I refused all of that noise, but noticed lots of others who thought nothing at the idea of borrowing an extra $2-4k on the semester.

  • Universities constantly lie. If it’s public, you can see how overinflated salaries are for professors. No college professor needs to be clearing $100k for what equates to ten hours of classtime in a week. Multiply that number of professors by 50x or 80x and that’s a lot of overinflated spending.

  • Universities want more money. My campus was just fine, but for some reason a new $28 million dollar, four story library was built. Complete with a Starbucks and deli built right into it. Also, brand new Apple computers for library use, as well as comfy leather recliners with state of the art headphones for a “laid back” study approach.

Universities are the problem.


#13

Most professors’ salaries are NOT overinflated. Very few make more than $100,000 and certainly not during the first 10 to 15 years of teaching, if they last that long. Further, what most students do not realize is that there is preparation at home and during office hours that goes into classroom teaching, not just the actual teaching. There is also the grading of essay exams and term papers, which is often very time-consuming, as well as writing letters of recommendation for students. Besides this, there are other teachers’ functions apart from teaching, which include advising students, participating in full faculty meetings and department meetings, doing committee work, doing research if one teaches at a research institution rather than a teaching institution, peer evaluation reports of non-tenured faculty and adjunct (part-time) faculty, self-evaluation reports, and a host of other chores. Believe me, college teaching is a full-time job and then some.


#14

Unfortunately, I have to disagree.

Yes there is time that is used in their “office” to grade papers/meet students. But I seriously doubt they all spend 30+ hours a week concentrating on all of that. Departmental meetings? Faculty meetings? Other than a once a year mass meeting, these are now done as MP4s and streamed to a professor’s email. There is no face to face contact.

I do agree with you that teaching full time is a job, but for some adjuncts, they are just endlessly tormented. I recall my foreign language teacher in university, she spoke three languages, and worked two jobs. Teaching a 5x5 load and, working the box office at the local Six Flags, just to make ends meet. Sad.


#15

Can you please tell me which of my meetings are streamed to my email? Believe me, when I served on the faculty senate there is nothing that would have made me happier than if they could have sent the whole thing to my email.


#16

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Perhaps my personal experience as a professor is different from your experience as a student. We have departmental meetings every month, face-to-face. We also are chairs or members of committees that work on a variety of academic issues. We assist students with planning their course schedules and we write letters of recommendation for them. We have to prepare peer evaluation reports of adjuncts and non-tenured full-time faculty. We also write self-evaluation reports every semester. All of this in addition to teaching four or five classes every semester, including sometimes one or two courses during intercession and summer months.

I am also well aware of adjunct faculty’s demands, having been one myself for several years. There is little job security at many colleges; the pay is abysmal; there are often no offices to speak with students; in many cases, there is no health coverage; often there is no adjunct union; and many adjuncts are not youngsters but seasoned professionals, some of whom already have their PhD or are doctoral candidates. Slave labor is the best description of such work.


#17

Unfortunately it was completely different, yes. If I told you half of what I experienced in college, you’d be speechless. I don’t say that to shock, but rather just convey that as someone who owes a student loan, I was promised a lot and given nothing.

To hit some of your post:

  • I had no advisor in college. Sure there was one linked to my online catalog, but they had been fired. When I pressed about getting assigned a new one, I was given someone else who was being let go. When I was supposed to be given a permanent one, I was assigned a faculty member who was a paraplegic and in the hospital. While I admire their zeal in trying to help, it was a mess. After pressing the department head, he gave in and authorized some courses against his “better judgment” as he told me. Sure I should have complained to the Dean of my college, but there wasn’t one as they had retired and the post wasn’t filled for my remaining college tenure.

  • There were student evaluations of faculty to be made every semester. I was forthright in every evaluation I ever completed. Then again there were times where the professor was grossly unfair and took the evaluations and ripped them up before our very eyes and promptly had a grad assistant dispose of them while we all exclaimed. The professor only offered
    a simple, “prove it”, as their defense for destroying evaluations. I suppose they just filled them out at home themselves and turned them in.

  • You are spot on for the adjunct treatment and pay. My wife was offered a full time adjunct spot and declined when she saw the pay. I cleared more when I managed an old movie theatre than she would have with three degrees teaching at a major university. I hope that if you do currently teach, that you are paid well and recognized for your efforts.

I am just soured on the never ending cry for “more money” from my university. They squelched me dry with $8k a semester housing, $2k in food, $500 to park (your spot was never guaranteed), and the obligatory $2k in books. This isn’t including the bastard tuition rate which after I calculated it, went up steadily 13% a semester for the five years I attended. Did I mention the University charged me a cool $89.99 for my own cap and gown? Or a $100 claim fee to even pick up my sheepskin from the office?

**For those constantly private messaging me that I’m exaggerating, I have five close relatives who teach at MAJOR universities, including one at my alma mater. So, yes, in a sense what I’m saying is fairly accurate.


#18

The problem is threefold:

First, college prices rose to meet the supply of credit made available for it. Hence it shouldn’t surprise anyone over 30 to walk around their old college campuses and find “improvements” that weren’t really necessary. After all, why should it cost that much more to teach calculus and most other subjects than it did 20, 30 and 40 years ago?

Second, the loans are guaranteed by the federal government, if not outright taken over by them. So the banks get guaranteed income for their participation in this charade.

Third, it was made nearly impossible with the 2006 bankruptcy reform for students to discharge their loans in bankruptcy. So the holder of the note is going to get paid. When one really thinks about it, those loans act as another source of income to the state in addition to the taxes paid by the borrower.

So we now have multiple problems associated with this: not only the elderly as shown by the article posted in this thread. But also the numerous students who have found their ability to buy property and form families quite impaired. For instance, if I’m interested in a woman for marriage, I’m going to vet her for debt. It isn’t just me either, this is already happening all over the place.

A decade ago, following the 2006 change in bankruptcy law, I advised an older co-worker that if he didn’t think his retirement could take the risk of nonpayment on his children’s college loans, then he had no business cosigning any of those loans for them. Offer to assist them in other ways, just not that one. That advice is still very applicable.

Finally, my college aged acquaintances from middle class and upper middle class families are now telling me that it is very difficult to get any aid (think grants and scholarships) for college without being required to take a loan in addition to the aid. We are not talking about small amounts either, we are talking about some students now being required to take on at least $10k per year in loans as a condition of receiving any aid. Think what a racket that is. Dang, I feel so lucky I escaped that …


#19

You are quite correct. A lot of scholarships these days require a “student co-loan”, meaning you must have a partial student loan and may not use a full scholarship.

I know a girl who I graduated high school with who had neglected to pay her student loans for almost a year before it caught up to her. Guess what? The government was about to garnish her paycheck by 20% every month. She couldn’t change the amount or anything. She works two jobs, one in a lab, and she works the drive-thru at Steak N Shake to makeup what the student loan takes out.

When I called FedLoan to work out payment arrangements, I found that I had already missed my first payment, but they rep overlooked it and took it off my loan. I was slightly paranoid about it until they cheerily reassured me that I had a “very small” loan ($10k!). She told me that she gets calls all the time from people who owe on average $200k and can’t afford montly $800 payments.


#20

Beyond that, a lot of science degrees don’t provide graduates with employment related skills. Of course this entirely depends on nature of the degree, but someone who studies life sciences, for example, isn’t much more employable than someone who studied political science.


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