Senate Hearing Focuses On Student Loan Debt, Aging Americans

By Brittany Hackett, Communications Staff

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

Teresa W | 9/12/2014 9:8:12 AM

Dave S...Please share with us your professional opinion or recommendation as it relates to the subject matter at hand..."Focusing on Student Loan Debt for Aging Americans"? I believe that your colleagues who are engaged in this discussion may be as interested as I am to know what your experience has been with borrowers in this age group, and what would you propose to do, if anything, to address their issues?

Dave S | 9/11/2014 3:0:35 PM

Sounds like exactly what I would expect from a career financial aid staff person. Probably falls asleep each night by snuggling up to Student Aid Handbook and regulations. Give me a break.

Elaine H | 9/11/2014 9:33:53 AM

Older student borrowers are often single parents. They can not go to school if they can not pay rent, and child care and daily living expenses. These borrowers do not have parents funding their living expenses. They are able to borrow as much as they do, because the financial aid budget includes housing and food expenses, and often child care. When they graduate life continues to throw expenses their way such as their children's braces and college costs. I am 55, I graduated when I was 37. I made regular payments for several years, but my children came first. Their teeth came first, then college expenses. So I had a forbearance on and off for several years, and the interest ballooned the debt . I have been making graduated payments for the last 3 years and have barley made a dent. I am determined to pay this off before I retire, but I must say I should also be saving for retirement and just can't. Older borrowers are different, their financial obligations are different. Do I think they should pay back their loans in full - yes, I do. But maybe if they are allowed a forberance, interest should not be piled on making the debt nearly impossible to pay back.

James C | 9/11/2014 9:25:06 AM

I couldn't have said it better myself Teresa. All the emphasis is on re-payment. There is little discussion about unecessary borrowing which is the real issue here or limiting borrowing especially for remedial credits, on-line student and part-time students.

Teresa W | 9/11/2014 9:9:30 AM

It would appear that Ms. Anderson did not make any payments on her loan since graduation, a period of more than 20 years? There are numerous repayment plans available and suitable for every situation, and in extreme cases, deferment and forbearance options should be used on a temporary basis. It has been my experience over the last 30+ years of working in Financial Aid and Default Prevention, that many students borrow in excess of what they truly need to cover educational expenses. The excess borrowing results in thousands of dollars in student funds that are spent on many other items that are not "educational" in nature. Our students are educated at the institutional level regarding loan repayment options, consequences of default, etc. In every instance, every borrower that has come to my office with Social Security garnishment due to defaulted loans was fully aware of their options and simply did not take advantage of any of the various repayment plans. Simply stated, they procrastinated and never made any attempt to make a payment arrangement until it was too late. It is my opinion that the system indeed works correctly in this area. More emphasis should be placed on limiting excessive student borrowing, and our Financial Aid Offices should be given more regulatory authority to oversee loan funding. Just yesterday, I had a student with $35,000 in student loans, $23,000 of which was disbursed in student funds during the course of her enrollment. In actuality, she only needed $12,000 to finish paying for tuition, books, and so forth. Another student, $55,000 in student loans, $30,000 of which in student funds. Again, these borrowers are made aware of their obligations at the institutional level, and throughout the repayment life of their loans which can span 10, 20, 30 years...Why then, are we looking to shift the responsibility of obligation, or create some new provision for this particular group of borrowers?

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