Recently, President Joe Biden announced the Department of Education will forgive $10,000 in student loan debt from most federal borrowers. Obviously, this will have a big impact on young people graduating from school and starting their professional careers. However, as I detailed in my blog, “Seniors and Student Loan Debt,” this issue will have enormous implications for older Americans as well. Often, older Americans incurred debt because they took out loans for their kids and/or went back to school later in life to make themselves more employable.
First, the statistics demonstrate the seriousness of the problem. According to the Washington Post, there are 2.5 million federal student loan borrowers who are over 62. Consider a 2017 Consumer Financial Protection Bureau (CFPB) study that showed around 40% of borrowers over the age of 65 were in default and you begin to see why student loan debt is crushing older Americans. Adding to the problem is that the Treasury Department can garnish a percentage of people’s Social Security benefits to pay back loans. This can be devasting for people who need Social Security as a critical source of income.
Biden’s loan forgiveness plan will potentially assist people like 63-year-old Lark Abelson. In September, CNN published an article regarding Abelson going back to school to get her associates degree in computer technology. Like many, she couldn’t find employment in her field and subsequently worked lower paying retail jobs. This resulted in Abelson not being able to pay the debt and going into default. As referenced above, applying for Social Security was not an option because she feared the federal government could withhold the money. However, Abelson is hopeful that loan forgiveness will wipe away her debt and change her future. “Because I know this is coming through, I actually started the process of claiming Social Security the day after Biden announced it,” Abelson said. “I am more than grateful.”
Unfortunately, Biden’s loan forgiveness plan is not a fix for everyone. In July, The New Yorker reported on Betty Ann, who is currently 93 years old and started law school in 1983 and took out $29,000 in federal loans. As of July, her debt ballooned to $329,309.69, an astronomical amount of money. Betty Ann spent the previous 30 years working for a nonprofit making minimum wage. Paying back the loan has been difficult, resulting in her selling family furniture and changing her lifestyle. The article says:
Betty Ann’s debt, in some ways, casts a shadow over her life, inviting doubt to hover over her decisions to pursue law school and leave a bad relationship despite its financial securities. She wonders if, without debt, she could have stayed in the home she once owned, rather than spending her final years in a rented apartment that needs new carpet and a paint job. Could she have retired earlier and caught up on her reading? Could she have finally written her family history, a story which blazes through the Trail of Tears, Reconstruction, and redlining? These matters are material.
Clearly, $10,000 in student loan forgiveness will do little to bolster Betty Ann’s fortunes.
Student loan debt is more than never-ending monthly payments. Analysis in 2019 by the American Association of Retired People’s (AARP) “suggested that borrowers who wait to start saving for retirement due to their student loan debt will need to work two to seven years longer to achieve the same account balances as their peers without debt.” Over time the cost of going to college has gone up enormously, far exceeding inflation. People nearing retirement age should not be forced to unnecessarily work to pay for their own or a loved one’s education.
Biden’s loan forgiveness plan has our country going in the right direction, assuming it withstands legal challenges. Though, as long as people like Betty Ann exist, Congress and the White House must find ways to make higher education affordable and help those individuals currently crushed by debt. Because nobody should be selling family furniture or not saving for retirement to pay back student loans.
Evan Carmen, Esq. is the Legislative Director for Aging Policy at the B’nai B’rith International Center for Senior Services. Click here to read more from Evan Carmen.