Although student loan debt carried by older Americans remains relatively low, their default rates are much higher than students in younger age groups, a Government Accountability Office (GAO) official told the Senate Special Committee on Aging during a hearing Wednesday.
Highlighting a GAO report released Wednesday, Charles Jeszeck, director of GAO’s Education Workforce and Income Security, in his testimony said that federal student debt among Americans ages 65 and older has increased from $2.8 billion in 2005 to $18.2 billion in 2013. Moreover, 27 percent of loans held by those between the ages of 65 and 72 were in default in 2013, compared with only 12 percent among those ages 25 to 49.
Jeszeck told the committee that there are numerous consequences for borrowers who default, particularly older borrowers, including the placement of offsets – the reduction of a monthly benefit like Social Security or retirement benefits – by the Department of Treasury in order to repay a Federal student loan. In 2013, 36,000 older student loan borrowers experienced an offset, he said.
The committee also heard testimony from Rosemary Anderson, a 57-year-old woman who pursued higher education in her 30s. According to her testimony, Anderson owed $64,000 upon completing school but due to a “variety of expenses” was unable to pay down her debt, which now totals more than $126,000.
“I will be indebted for life, and my growing concern is that when I reach the age to take Social Security, a sizeable portion of my check will be garnished to pay off the money,” Anderson said. “It is frustrating that in this one area, there is no real relief for people like me.”
In his testimony, William Leith, chief business officer for Federal Student Aid?, said that the Department of Education is committed to “improv[ing] the tools and options available to help students manage their debt,” including income-based repayment options and debt discharge due to permanent disability.
However, Committee Chair Bill Nelson (D-FL) told Leith, “If the focus is on helping people and helping them make timely payments and stay out of debt, what we’ve heard here makes it sound like the system is not working correctly.”
Publication Date: 9/11/2014