When one typically thinks of individuals facing financial hardship due to student loan debt, retirees don’t usually jump to mind. But a recent government study reveals that the number of Americans that carry student loan debt into their retirement has increased by at least 400 percent in the past decade.

This fall the federal Government Accountability Office (GAO) published its analysis of senior Americans and student loan debt. The report title pretty much summed up its findings: “Older Americans: Inability to Repay Student Loans May Affect Financial Security of a Small Percentage of Retirees.”

The issue was also the topic of discussion of a recent hearing by the Senate Special Committee on Aging, at which several Congressmen noted that the problem has not gotten the attention that it deserves.

“While many may think of student loan debt for just a young person, increasingly that’s not the case,” Senator Bill Nelson (D-FL) remarked.

How serious is the problem? The GAO is quick to acknowledge that retiring Americans are much more likely to carry other financial burdens into retirement. Still, more than 700,000 households headed by Americans 65 or older now carry student debt. So for many Americans the problem is very real, and the numbers affected are on the rise.

“Compared to student loan debt, those 65 and older are much more likely to carry other types of debt,” the GAO noted in its report highlights. “For example, about 29 percent carry home mortgage debt and 27 percent carry credit card debt. Still, student debt among older American households has grown in recent years. The percentage of households headed by those aged 65 to 74 having student debt grew from about 1 percent in 2004 to about 4 percent in 2010.”

To put the issue in further context, the GAO says that while those 65 or older account for a small fraction of the total amount of outstanding federal student debt in this country, the accumulative amount of that debt has grown from approximately $2.8 billion in 2005 to $18.2 billion in 2013.

And older Americans are becoming indebted and struggling to repay student loans at much higher rates than younger individuals.

Advising Seniors on How To Manage the Debt

Not all financial planners and retirement advisors may have encountered clients with student loan debt yet, but with the numbers steadily on the rise, the odds are they you will.

According to the GAO, there are a number of reasons why Americans might still be facing student loan debt at retirement age. In the majority of cases (70 to 80 percent, says the GAO), the debt is from loans taken out by the individual for graduate or continuing education courses required for their careers. In another 20 percent of cases, the debt is due to loans they took out for their children or other dependents.

As Karla McAvoy, a financial advisor with HC Financial Advisors, Inc., in Lafayette, CA, points out, in some cases the individual never expected that the student loan debt in question would be their burden – they were co-signers to someone else’s loan.

“I’ve been thinking about it a lot, and it almost makes my stomach turn,” McAvoy says of the idea that people could still be faced with student loan debt at that late stage in life. “They often will get themselves into this situation by co-signing a loan for a family member, and we always caution our clients against that because of exactly this type of situation — where the loan doesn’t get paid, it falls into their lap to be responsible for, and they’re at a point in life when they really don’t have the time or the resources to manage it.”

As a result, “I would always caution somebody about co-signing someone else’s loan, especially a college loan,” McAvoy says. “With the understanding that a parent will often need to do that, I’ve seen cases where it gets out to the grand-parents. If you’re not the parent and you just don’t have a lot of resources, I would be very cautious about going into student loan co-signing.”

For many retirees carrying student loan debt, it may be a case of bad math – taking out a student loan at a point where the length of the loan will exceed their working years or the amount was excessive.

Whatever the circumstances, McAvoy says she especially worries about student loan debt for retirees because of the restrictions that such loans can carry and the potentially high interest rates. The terms can be very difficult to renegotiate.

McAvoy’s strongest advice to financial planners on how to best deal with a client carrying student loan debt is to advise them to hold off on full retirement.

“If I knew somebody was getting close to retirement and was in this situation I would advise them to continue working and pay down as much as they can, until they absolutely have to stop working,” McAvoy says.

Failing that, “Consolidating the debt is a good idea, to at least get it down to one payment,” McAvoy advises. “If someone is in a situation that they can refinance a mortgage and pay off the student loan that way — that would be a good route to go. Or look around and see if there are other places where they can trim expenses. It would just be so onerous to go into retirement and have this hanging over you.”

The High Toll on Seniors of Higher Education Funding

McAvoy’s advice is supported by another key finding from the GAO report: “Such debt can reduce net worth and income, thereby diminishing overall retirement financial security. Student loan debt held by older Americans can be especially daunting because unlike other types of debt, it generally cannot be discharged in bankruptcy.”

The GAO report also finds that borrowers age 65 and older defaulted on federal student loans at a much higher rate (more than one-quarter of federal student loans held by individuals 65 to 74 years of age are in default, compared to 12 percent of loans held by individuals aged 24 to 49). As a result, a portion of the individual’s Social Security disability, retirement or survivor benefits can be garnished to pay back the debt.

“From 2002 through 2013, the number of individuals whose Social Security benefits were offset to pay student loan debt increased about five-fold from about 31,000 to 155,000,” the GAO says. “Among those 65 and older, the number of individuals whose benefits were offset grew from about 6,000 to about 36,000 over the same period, rough a 500 percent increase.”

That is a chilling statistic in McAvoy’s mind.

“This gives me a sense of extreme worry,” McAvoy says. “Obviously it is a very difficult position for somebody to be in. On a larger scale, I started thinking of our society as a whole. These incredible burdens that we’re putting on people that do want to pursue a higher education, and is it something that is sustainable, if we’re now finding that seniors – so close to retirement – still owe college debt. That to me just screams that there is some sort of reform that is needed.”