Can you imagine being 75 and still paying off your college loans?

It seems that that’s exactly what’s happening to hundreds of thousands of older Americans.



While young people have earned most of the attention for the burden of student loans – the national plague of debt that now numbers $1tn – baby boomers are suffering too. According to the Government Accountability Office (GAO), 3% of those 65 and older carry student loan debt – which adds up to 706,000 older households that owe $18.2bn into their golden years.

About 82% of the loans taken out by retirees were for their own education. Overall, about 3.75 million of students enrolled in college in 2011 are 35 or older.

For those under 64, that number dropped to 73%. Alarmingly, 27% of the student loans held by the under-64 group were for their children’s educations. This suggests that boomers and millennials are tied together by the common bond of shared student debt.

In order to repay their outstanding student loans, the Treasury takes a little over $130 a month from the social security benefits of anyone over 65 who still owes money on student loans. In 2013, the Treasury collected $150m that way.



Facebook Twitter Pinterest About 18% of elderly US women live in poverty. Photograph: Rui Vieira/PA Wire/Press Association Images

The dynamics for retirees are different from those among younger graduates. Among the baby boomers struggling with student loans are three main types: those who have gone back to school later in life; those who have opted for smaller monthly repayments and longer extensions on the loans; and those who have at some point in their life defaulted on their federal loans.

The repayment horizon for such federal loans, according to the GAO, is 10 to 25 years. The standard repayment plan is about 10 years. For those who want to lower their monthly payment, however, there are plans that can span as much as 30 years.

Borrowers aged 65 and older are more likely to hold default loans, which can lead to the government garnishing their social security disability, retirement or survivor benefits to pay off these loans.

According to the report, about 27% of loans held by those 65 to 74 were in default. More than half of loans held by those 75 or older were in default.

The number of those whose social security benefits were garnished increased to 155,000 in 2013 from 31,000 in 2002.



“As the baby boomers continue to move into retirement, the number of older Americans with defaulted loans will only continue to increase,” noted the GAO report. “This creates the potential for an unpleasant surprise for some, as their benefits are offset and they face the possibility of a less secure retirement.”

Last year, about 36,000 of them were 65 or older. Loss of even a fraction of their benefits can plunge them into poverty. About 9.1% of elderly Americans already live in poverty, according to the US census. For elderly women, that number is 18%. According to the National Women’s Law Center, about 2.6 million elderly women are living in poverty and 733,000 of those live in extreme poverty, surviving on as little as $5,500 a year, or $458 a month.

The trend of garnishing social security benefits for student loans exists because of outdated measures of what constitutes poverty. In 1998, Congress decided that the Treasury could not collect payments from those who would see their benefits reduced below $750. The calculation was based on what the poverty line was at the time, the GAO report noted.



If the limit for garnishing wages were adjusted, in 2013 it would have increased to about $1,073 a month. If those limits were updated to today’s levels, 68% of all the retirees whose social security benefits were reduced to pay back student loans “would have kept their entire benefit”.



About 36,000 of those 65 and over saw their social security benefits reduced due to federal student loan debt. Photograph: US Government Accountability Office

It’s not a new problem, but it’s a growing one. According to a recent report by the GAO, the average student debt for members of this age group increased from $13,600 to $21,200 since 1998.



“Although federal student loans can remain unpaid for more than a year before the Department of Education takes aggressive action to recover the funds, once initiated, the actions can have serious consequences,” the GAO found.

It’s important to note that not only are elderly women more likely to live in poverty than men, but they are also more likely to attend school later in life and be saddled with student loans. While just 1.3 million men aged 35 or older attended college in 2011, about 2.5 million women in that age group did.