The pause on federal student loan repayments is set to end on May 1, but paying off college debt isn’t just an issue for Millennials and Gen Z.
RICHMOND, Va. — At 61, Lori Scott plans to retire by 2024, taking nearly three decades of memories from her career in special education with her. But she said there’s one thing she has no intention of taking on in retirement: student loan debt.
“By the time I retire it will be over $60,000,” Scott said. “And… when I got the student loans, it was maybe only 20 [thousand].”
The increase in debt came after sometimes defaulting and accumulating interest over 30 years.
“The penalties, you know, because of the times, the financial times, I couldn’t, you know, keep up with the payments.” said Scott. “So I’m afraid, you know, it’s going to last…it’s [going to] lasts all my life, [be]because I don’t think I’ll ever be able to repay that money.”
And she is not alone. The US Department of Education reports that about 2.4 million Americans age 62 and older carry an average of $40,750 in college debt. By comparison, those aged 25 to 34 owe $33,570.47 on average.
“It’s probably one of two sources, or maybe a combination of both,” said Scott Kemp, the Virginia student loans attorney.
“One, either at some point in their careers they came back and got graduate degrees…but also they might have parent loans, parent more ready. So they got them for their children, and even in a few situations, for their grandchildren… And, you know, the standard repayment plan is ten years, so it stretches a lot longer.”
While these baby boomers make up only about 5% of student borrowers in the United States, the group has substantial loan debt.
“The feds are very persistent with their loans,” Kemp said. “You know, they have the ability to garnish wages, take tax refunds.”
Kemp said this could be especially a problem for retirees on fixed incomes.
“When they look at how much they have to pay each month and how much they have left… You know, I have borrowers who are contemplating the prospect of not being able to repay their loans at all,” he explained.
Kemp said that should serve as a message to students entering college soon to consider lower-cost options, like community colleges, or to be responsible when taking out student loans.
“When you get your financial aid letter…the amount you can borrow is based on the cost of attendance, which is a calculation made by the college. But that doesn’t necessarily mean you have to take on that amount. altogether,” he said.
“Because when you look at how much that extra thousand or two thousand they take out…the interest that accumulates over time and, you know, maybe it’s better to cut corners and save here and there …and try to pay as much as you can up front before you get to that.”
It’s a lesson Scott said she wanted to share with her grandchildren and students.
“You are [going to] will have to pay that money back,” Scott said. “That extra $23,000 that they send you a check and say, ‘Oh, that [is] your refund check. This [is] what you had left’– it’s a loan. It’s a loan. You are [going to] you have to pay it back.”
The Virginia State Board of Higher Education offers in line education courses and resources for student borrowers.
If you’re worried about your ability to repay your loans when the federal break ends, Kemp recommends contacting your loan manager. You can negotiate an income-oriented repayment plan or inquire about other options to make repayment more manageable.