Student Loans Trap Parents, Too
"About 2.2 million Americans who are 60 and older have co-signed private student loans for their children and will be responsible for that debt if their children can't pay," The Deseret News reports. "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. ... The average amount of debt per student is $26,500, and the National Association for Student Financial Aid Administrators (NASFAA) deems that amount "manageable." Nonetheless, a 2013 report from the financial aid administrators group called for the federal government to tighten requirements for its Parent PLUS loan program. ... The only eligibility requirement for a Parent PLUS loan is that parents must have no adverse credit history — income levels and current indebtedness are not checked. Parents who continue to borrow through the Parent PLUS program to stay ahead of debts could remain within the 'no adverse credit' rule, even though they might be accumulating debts that far exceed their ability to repay, said Megan McClean, director of policy and federal relations for NASFAA. Despite the dangerous ease of over-borrowing, Parent PLUS loans are a better choice than private loans for financing a child's education, McClean said. 'We encourage students and families to exhaust federal options before going to private loans,' she said. 'Federal loans offer great protections, like a grace period after graduation. And they are dischargeable upon death or permanent disability.'"
NASFAA's "Financial Aid in the News" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.