Graduating with scholar mortgage debt is an all too widespread actuality for brand new faculty diploma holders starting their careers. However there’s one other, typically missed cohort of debtors going through their very own set of challenges: Individuals over the age of 55 approaching their retirement years. 

About 2.2 million folks over the age of 55 have excellent scholar loans, in accordance with knowledge from the Federal Reserve Board’s 2022 Survey of Client Finance. These older staff and unemployed folks say the loans they took out years earlier may hinder their potential to retire comfortably, in accordance with a brand new report on the consequences of scholar mortgage debt on monetary safety for older staff. 

“Debt-burdened older staff face scholar mortgage compensation properly into their retirement age years,” in accordance with The New College’s Schwartz Middle for Financial Coverage Evaluation. 

On common, staff age 55 to 64 take practically 11 years to repay their scholar loans, whereas staff 65 and up require 3.5 years, federal knowledge reveals.

The report comes as Individuals more and more query the worth of a school diploma, with a brand new Pew Analysis Middle survey displaying that solely about 1 in 4 Individuals consider a bachelor’s diploma is critical to land a very good job.

Of all scholar mortgage debtors over the age of 55, 43% are middle-income, the Schwartz Middle researchers discovered. Half of debtors aged 55 and over who’re nonetheless working are within the backside half of earnings earners, making beneath $54,600 a yr, the report reveals.

The latter’s comparatively small incomes imply they sharply really feel the consequences of placing a portion of their wage towards paying off scholar loans, making it laborious for them to retire and save for retirement. 

Some older scholar debtors additionally fail to acquire a level, placing them in a very precarious monetary place. Not solely should they make repayments on the loans, however they need to achieve this with out having benefited from what is named the “sheepskin impact,” referring to the superior incomes energy a school diploma sometimes confers on job seekers. 

Almost 5% of staff between 55 and 64, and greater than 17% of staff 65 and older, haven’t accomplished the levels for which they’d taken out loans, in accordance with the report. These older staff are each in debt and lack enhanced incomes energy.

Coverage interventions like debt forgiveness, making debt compensation simpler, or stopping the garnishing of Social Safety advantages to repay scholar loans, can mitigate these impacts, the report’s authors argue.