Nearly 40 percent of federal student loan borrowers age 65 and older were in default in 2015, according to a report released today by the CFPB, as many borrowers deal with payments on student loans they have acquired for their children and grandchildren
Additionally, the report states, older borrowers complain about obstacles to enrolling in income-driven payment plans and accessing their protections as cosigners, among other things.
The report, “Snapshot of older consumers and student loan debt,” examines complaints from older student loan borrowers about servicing practices that, CFPB stated, can jeopardize their long-term financial security. According to the report, in the last decade, the number of older student loan borrowers has quadrupled and the amount of debt per older borrower has roughly doubled, as many take out loans for children or grandchildren.
In a release, CFPB stated that student loans make up the nation’s second largest consumer debt market, and seniors are the fastest growing segment of this market. From 2005 to 2015, the release stated, the number of Americans age 60 or older with one or more student loans grew from about 700,000 to 2.8 million. Average debt load owed by an older borrower, the release states, changed from $12,000 to $23,500.
The release notes that CFPB’s analysis of survey data shows that about three-in-four older borrowers with student loans used them to finance their children’s or grandchildren’s college education.
Among the problems with student loan servicing that older borrowers complain about are:
- Delayed or prohibited enrollment in income-driven payment plans (such as those that allow their loan payment amounts to be reassessed under an income-driven plan when borrowers’ income changes – a typical issue for older borrowers);
- Incorrect application of co-signer payments to other loans owed by the primary borrower;
- Failure to provide borrowers access to loan information;
- Threats to offset private student loan borrowers’ federally protected benefits.