I had been contemplating writing about the hidden faces of the student debt crisis in this country and then the pandemic crisis reared its ugly head. There has been a great deal written and said about the plague that has befallen the world. As we are learning every succeeding day, there is no immunity to being affected by this calamity that wreaks havoc on the global economy and healthy well-being of all people. As has been stated over-and -over, it has no respect for age, race, religion, political affiliation or any other identifier of humankind. It seems to be a relentless enemy that is hell-bent on making every effort to destroy what we have come to know as normal. Many a person has referred to the “new normal”, whatever that might be. We are already experiencing some aspects of this varied way of life. We are unable to dine out, gather in public places, or move freely about without experiencing the stares of others. We are admonished to maintain a social (physical) distance when in the company of others, whether at the supermarket, pharmacy, pet store, Home Depot, or anywhere that there is more than one other person. Indeed, life will not be the same when we begin to see some end to what we are now living through each day. Just as life changed after the 9/11 attacks, the end of WWII, and the conclusion of the great depression, life will never be the same for those of us who live through the current crisis.
Unless one has been living in some abyss, we are all aware that there is a massive problem in this country that is not related to the pandemic yet impacts millions upon millions of individuals. Student debt in this country hovers around $1.6 trillion and continues to grow. Having spent the better part of my adult life in the academic world, I have been aware of students living off student loans and leaving school with enormous debt obligations. I recall a young lady who was a waitress in a restaurant/pub that I frequent just off the university campus. As she was getting closer to graduation, we had several discussions about her future. It is my recollection that she was majoring in hospitality management and public relations. Her goal was to find employment in the hospitality industry. Over the year, we eventually got around to her student debt which had reached $98,000. Keep in mind her preferred employment goal. It is highly unlikely that she will ever earn the kind of money to make regular payments on such an enormous debt obligation. Within the past year or so, I read an article in Consumer Reports which carried the title, “I went to college and ruined my life”. It is, indeed, a travesty that young people can get themselves into this level of potential servitude for the rest of their lives. There have been those who have postponed weddings, having children or buying a house because they are unable to consider anything that will take away funds that must go towards paying off the debt.
To put the level of student loan debt into perspective, Nitro College published, “Average Student Loan Debt in the U.S. – 2020 Statistics”. Included in the document is a very cogent paragraph: “in the past decade, total U.S. student loan debt has surpassed credit card debt and auto loan debt. In the third quarter of 2018, Americans owed $840 billion on their credit cards and $1.21 trillion in auto loans. Currently, U.S. student loan obligations are larger than both, trailing only mortgages in scope and impact.” Further, it is noted that 1 in 4 adult Americans have student loan debt. “There are 44.7 million people with active student loans in the U.S. and the overwhelming majority of them are under the age of 60.” This means that 26 percent of the younger adults under 60 are paying off student loan debt.
Into this fiscal reality lies a significant number of individuals over the age of 60 who are paying off student loans. As co-signers on student loans, parents and grandparents are picking up the payment of the debt during a time in their life when they were anticipating living out their final years in some measure of comfort. If they are paying on their own student loan debt it only compounds the issue. In a CNBC publication, the following comments paint a very sad and perplexing picture: “Today at least 3.4 million people hold so-call parent PLUS loans and they owe nearly $90 billion, according to a new report by the Brookings Institution. Currently, the average parent plus balance is about $26,000 and default rates among parent borrowers are also on the rise.” A brief case study was included in the article and provides some woeful clarity to this issue. A mother and her daughter toured a for-profit university in Florida. Following the visit, the mother and daughter were hooked. To attend, they would have to go into debt to cover the four years of tuition, fees, books, and living expenses. The mother took out a Parent PLUS loan from the government in the amount of $160,000. Her annual salary as a social worker is $50,000 and the monthly student loan payment is $600. The monthly payment barely covers the interest on the debt and the amount she owes has ballooned to over $200,000. The 63-year-old mother states: “I have nothing that is going to sustain me if I stop working. This loan governs my life.”
Take the case of Patrick Donohue and his wife, as reported in the New York Times. After a 20-year career in customer service with AT&T he retired at the age of 64. They owed almost $98,000 that had been borrowed from the government to put their four daughters through college. The monthly amount they owe is a $1,000, about the same amount of his monthly pension. To cover additional living expenses, Donohue, went back to work as a customer service representative for a local grocery store chain. Within the same article, there is the case of 55-year-old Kimberly Weihl. She was already paying off her own student debt of $60,000 but took on additional debt to cover the costs for her daughter to attend a state university in their home state of Michigan. Now she owes $77,000. The daughter dropped out of college, is living back at home, working as a waitress, but not making any payments on her $500 a month portion of the student debt. Ms. Wiehl cannot foresee the time when she will be able to retire from her job as a nurse. She went on to say that she is convinced she will die before she is able to resolve the debt obligation. She is having difficulty sleeping and is experiencing other physical problems.
A final reference to the New York Times article provides a bit of a summary to the personal costs associated with the lingering debt that hangs over those plus 60 -year old Americans. A researcher at the M.I.T. AgeLab stated; “…student loans and longevity planning are at odds within many debt-saddled households. Pre-retirement milestones like paying off a mortgage get shelved in favor of paying off loans…” and in many cases a person’s mental and physical health is affected. Painful choices must and are being made.
Other complications confront those who are making these payments later in life. If they are the recipient of Social Security benefits, those benefits can be garnished up to 15 percent of the benefit if the person defaults on the loan payment. In a 2016 Government Accountability Office report, it was reported that nearly 40 percent of borrowers 65 and older were in default on federal student loans. Additionally, if a person files for bankruptcy, the student loan debt cannot be included. Do keep in mind, that what I have included predates the current crisis in this country. When you overlay the ever intrusive Covid 19 virus, at the very least, you have an exacerbating effect on what has evolved into a personal fiscal nightmare.