An exploding number of households headed by older Americans are carrying federal student debt, according to an analysis by the Government Accountability Office.
That can mean serious consequences to the retirement security of these people, because the government can recover unpaid loans from the borrower’s Social Security retirement, disability or survivor benefits.
The GAO report says that from 2002 through 2013, the overall number of individuals whose Social Security benefits were adjusted to pay for loan debt increased five-fold, from roughly 31,000 to 155,000. Among those 65 and older, the number of Americans who saw their Social Security benefits adjusted to cover outstanding student loan debt grew from 6,000 to 36,000.
While older Americans are much more likely to carry mortgage and credit card debt into retirement, the number of older households carrying student debt grew to 4 percent in 2010, up from 1 percent in 2004.
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That’s compared to the 24 percent of households, or 22 million, headed by someone 65 or younger with student debt.
Seemingly small in percentages, the actual dollar amount of older Americans’ student debt is significant. It grew from $2.8 billion in 2005 to about $18.2 billion in 2013.
And older Americans are defaulting on student loans at a much higher rate than their younger counterparts. About 27 percent of student loans held by individuals 65 to 74 were in default in 2013, while more than half of those held by those 75 or older were in default, the GAO found.