New Jersey parents seeking ways to help pay for their children’s college educations often turn to loans when other sources of aid are not sufficient. ParentPLUS loans can be used to adjunct scholarships, work study, direct student loans and grants. However, there is a growing problem in America regarding these loans. As more older adults are borrowing, more are also encountering financial challenges.
The Federal Reserve Bank of New York notes that in 2005, 700,000 people over 60 took out education loans. The U.S. Government Accountability Office notes that loans obtained by people over 65 totaled $2.8 billion. In 2013, roughly 2.2 million people over 60 took out these loans. The value of education loans by this time among the 65-plus age group was $18.2 billion. These loans are growing twice as fast as student loans are growing.
The default rate for these loans has also increased. A default status is noted after 270 days of non-payment. In 2013, over half of borrowers aged 75 or older were in default on student loans. More than one-fourth of borrowers between 65 and 74 were in default. Because these loans are not able to be discharged via bankruptcy, consumers are left struggling with what to do. The government can and has recouped some of these funds from borrowers’ Social Security payments. In 2002, 31,000 people saw some of their Social Security lost in this way. In 2013, that number was 155,000.
New Jersey residents facing the tough issue of how to pay for college debt may feel they have limited options. Talking to an attorney experienced in debt relief may be a good idea.
Source: Bloomberg Businessweek, “Student Debt May Be the Next Crisis Facing Elderly Americans,” Natalie Kitroeff, December 18, 2015