Student debt draining retired income

Lots is written about students exiting college saddled with hefty student loans; however, the impact on retired parents went largely unnoticed.

Recently, Wall Street Journal writer AnnaMaria Andriotis reported Americans over 60 years old are coming out of retirement and going back to work just to pay for their children’s education.

On average student borrowers in their 60s owed $33,800 in 2017 up 44 percent from 2010. Student loan debt for seniors rose 161 percent between 2010 and 2017. It was the largest increase of any group.

Why the shift to parents? In 2008, lenders started requiring moms and dads to co-sign for college loans.

As a result, seniors are finding themselves working deeper into their retirement years and are holding on to jobs that younger adults would normally take.

Older financially-strapped Americans are relying more on credit cards and personal loans just to pay their normal living expenses. Unfortunately, people over 65 account for a growing share of bankruptcy filings.

Last October, Bloomberg reported federal student loans are the only consumer debt segment with continuous cumulative growth since the Great Recession. “As the costs of tuition and borrowing continue to rise, the result is a widening default crisis that even Fed Chairman Jerome Powell labeled as a cause for concern.”

All told, there’s a whopping $1.5 trillion in outstanding student loans and, according to the Federal Reserve, the number keeps growing.

Bloomberg concluded: “The cost of borrowing has also risen over the last two years. Undergraduates saw interest on direct subsidized and unsubsidized loans jump to 5 percent this year—the highest rate since 2009—while students seeking graduate and professional degrees now face a 6.6 percent interest rate, according to the U.S. Department of Education.”

What can be done?

Many parents have refinanced their homes which carry much lower interest rates. However, that impacts seniors many of whom anticipated burning their mortgage before collecting Social Security.

Since a big chunk of student loans are to those who drop out of school, parents and students need to carefully consider if a four-year university is really for them. Community college tuition is more affordable and offers high school graduates an opportunity to look at a greater diversity of career options.

For example the U.S. Bureau of Labor Statistics report there are 6.7 million good paying jobs going unfilled in construction, manufacturing, health care and transportation—-career options offered at community and technical colleges. These are well-paid jobs that prospective employers will often help reimburse tuition and provide on-the-job training.

A challenge for our four-year universities is finding ways to lower tuition.

Since the 1970 tuition has skyrocketed by 1,000 percent while the consumer-price index has risen by 240 percent, according to 2015 data. By 2010, the percentage of annual household income required to pay the average private four-year tuition reached 36 percent, up from 16 percent in 1970.

Meanwhile, university endowments continue to rise. Hundreds of U.S. universities made strong returns on their financial investments last year, the Associated Press reported. A survey of more than 800 colleges and universities found that their endowments returned an average of 8.2 percent in 2018, down from 12.2 percent in 2017.

To help focus on degrees which lead to employment, some universities are eliminating programs. Others are streamlining courses leading to degrees and sequencing them in a way that students are able to graduate on time.

Andriotis’ article is timely. Seniors also worry about the viability of their retirement plans. State and federal lawmakers are now scrambling to deal with an estimated $4 trillion shortfall in retirement savings plans, Bipartisan Policy Center reports. Stay tuned.

Don C. Brunell is a business analyst, writer and columnist. He recently retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.


Talk to us

Please share your story tips by emailing editor@rentonreporter.com.

To share your opinion for publication, submit a letter through our website https://www.rentonreporter.com/submit-letter/. Include your name, address and daytime phone number. (We’ll only publish your name and hometown.) Please keep letters to 300 words or less.

More in Opinion

Cartoon by Frank Shiers
Editorial: Stopping COVID is now up to each of us

With a resurgence threatening, we need to take greater responsibility to keep the virus in check.

Armondo Pavone is the Mayor of Renton.
Renton needs a defined timetable for homeless shelter | Guest editorial

By Armondo Pavone and Ruth Pérez, Special to the Renton Reporter The… Continue reading

Back to the wild — a whole new outdoor recreation world | Guest editorial

When enjoying the great outdoors, continue to socially distance and be aware of how else COVID-19 has changed our world.

KCLS is stepping up its commitment to patrons

KCLS has expanding its online resources so patrons can continue to learn, build skills, stay entertained and remain mentally and physically active amid the pandemic.

Ardra Arwin.
‘Let’s not go out and play!’

A poem by Renton resident Ardra Arwin, age 8

How using a face mask to cover my Asian face could put me in danger

Since the COVID-19 outbreak began, Asians and Asian Americans have been targeted.

Opinion: Public deserves honest information on sex education

The Washington comprehensive sex education bill passed in the Senate on March 7.

Grocery store staff are working hard to keep the shelves stocked during the COVID-19 pandemic. File photo
Thank you grocery store clerks

Recognizing the sacrifices of our unsung essential workforce.

Catch each other during this fall

How we can use the quarantine to reflect on necessary social changes

To our elected officials: Be bold, be consistent, be honest, be helpful

By Patrick Grubb, Washington Newspaper Publishers Association Governor Jay Inslee has been… Continue reading

Letters to the editor for the week of March 13

Reader worries about the county’s reach Dear editor, The article regarding King… Continue reading

As the deadline nears, state lawmakers face a few challenges

There are four major decisions lawmakers are tackling before the end of this legislative session.