Carrying College Debt to the Grave
What a shocker. I didn’t know the Silent Generation, the generation before the Boomers, was one of FIVE generations stung and strung out by the college loan crisis. It is a cautionary tale for those feeling confident in borrowing huge sums of money for college or graduate studies.
The New Yorker magazine published a looong article in late July 2022. Below are some excerpts with commentary. For the full article, check it out at:https://www.newyorker.com/news/us-journal/the-aging-student-debtors-of-america.
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“I thought the only way that I could change things was to have a higher degree,” she told me.
In 1983, at the age of fifty-two, Betty Ann enrolled in New York University’s law school. As a middle-aged Black woman, she wasn’t exactly the typical N.Y.U. law student. Her white male classmates would slyly elbow her books off the long library tables, and once, while standing at her locker, a classmate waved a ten-thousand-dollar tuition check, signed by his father, in her face. Betty Ann had borrowed twenty-nine thousand dollars in federal loans. Today, she owes $329,309.69 in student debt. She is ninety-one years old.
Americans aged sixty-two and older are the fastest-growing demographic of student borrowers. Of the forty-five million Americans who hold student debt, one in five are over fifty years old. Between 2004 and 2018, student-loan balances for borrowers over fifty increased by five hundred and twelve percent. Perhaps because policymakers have considered student debt as the burden of upwardly mobile young people, inaction has seemed a reasonable response, as if time itself will solve the problem. But, in an era of declining wages and rising debt, Americans are not aging out of their student loans—they are aging into them.”
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Commentary: Let me add this statistic. ONLY 20% of current federal student loans are up-to-date and in good order. THAT MEANS, 4 out of 5 former student loan payments are behind, suspended, or worse, caught in the loan vortex. To say the system is horrid, broken, and terrible would be too kind.
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“The student-debt crisis is particularly dire for Black borrowers. Racial wealth gaps mean that Black debtors borrow more to attend college and carry balances for a longer time, effectively paying more for the same degree than their white classmates. Four years after graduating, nearly half of Black graduates owe more on their loans than their initial balance, compared with just seventeen percent of white graduates.”
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Commentary:
Add this to the statistics above; when a student choose careers in lower-paying fields like teaching, child care, small business support, and state and federal social services programs, otherwise known as the “do-good” careers, they may struggle to repay their loans. Career majors matter; lower-paying professions tend to be filled disproportionately with women and minorities, exacerbating their student loan issues.
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“Although most older student debtors have borrowed money for their own education, approximately one-third have taken out loans on behalf of a child or grandchild. Unlike direct federal loans, which have borrowing limits, parents can take on virtually infinite amounts of debt—up to the full cost of attendance each year—to finance their children’s education through a program called Parent Plus. Parent loans often come with punishing terms, such as significantly higher interest rates and scant options for relief. Parent Plus recipients are only eligible for one type of income-driven repayment program, which requires loan consolidation; any opportunities for public-service loan forgiveness are extremely limited. Some parents are stuck paying for loans even if their child dies.”
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Commentary:
Parent Plus loans are the equivalents of borrowing from a loan shark. For proof, read on——
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“Defaulted student loans can trigger the Department of Education to command garnishment for tax refunds, wages, and Social Security. In 2015, more than two hundred thousand student debtors over the age of fifty had their Social Security garnished.”
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Commentary:
That is a LOW figure. The only reason it is that low is because the Department of Education can’t get its’ act together to enforce its own rules. That inefficiency hurts in other areas, too. Read on.
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“In theory, I.D.R. (Income Driven Repayment ) offers relief to lower-income borrowers by offering lower payments and an expiration date, while recovering full costs from higher-income borrowers. But the program has been an administrative failure, thwarting its redistributive promises and exacerbating the student-debt system’s underlying inequities. Lower loan payments allow interest to fester and capitalize, swelling balances to amounts far greater than the original. Meanwhile, banks and loan servicers are guaranteed profits from the federal government. And, owing to negligent bookkeeping, I.D.R.’s promise of cancellation has proved to be a mere mirage: as of 2021, more than four million borrowers could have accessed I.D.R. loan cancellation, but only a hundred and fifty-seven had ever received it”.
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So, there’s that. Without slinging words or mud, this ENTIRE FEDERAL STUDENT LOAN SYSTEM IS OPERATING LIKE A SCAM. Promises are made by college reps who have no accountability; students AND parents trust those statements to their horror in the years to come; once in, you remain at the mercy of federal and private lenders who have no incentive to assist you. You’ve been lied to and these are the price tags.
In the meantime, the ONLY reasonable advice I can give is this:
AVOID THE WHOLE LENDING SYSTEM. PERIOD. Don’t let the easy access to Federal Loans cost you for the rest of your life. First, step back. Second, look for alternative paths. Third, make it your goal to do higher education differently. It MAY take a little more time. It may require you to work hard, maybe live at home and save up for one or two years. This one thing could make a massive difference in your financial well-being for the rest of your life.
You can take THAT to the bank.
Until Next Time,
All My Best,
Bonnie Burkett
