Seniors & Student Loan Debt: Is There Any Way Out?

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The problem of mounting student loan debt in the United States largely centers on younger people who are struggling to pay off loans along with their other bills. But seniors on fixed incomes also face many of the same challenges.

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Baby boomers have the highest average student loan payments, highest average loan balances and highest average interest rates of all the generations, Bloomberg reported last year, citing September data from Fidelity Investments. Those numbers are likely little changed in 2022 thanks to a pause in federal student loan payments that began in 2020 during the early days of the COVID-19 pandemic.

Yet senior citizens are often left out of the conversation when lawmakers, including President Joe Biden, discuss student loan relief, according to Andrew Pentis, a loans expert and certified student loan counselor at StudentLoanHero.

The Biden administration has “been really great about targeted student loan forgiveness programs” for veterans, disabled people and other groups, Pentis recently told MarketWatch. That’s not the case for older borrowers, however — despite the fact that seniors make up a significant portion of student loan debt holders.

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Of the $1.6 trillion in total student debt at the end of 2020, borrowers 50 and older owed about $336.1 billion, or roughly 22%, the AARP reported. That represented an increase of more than a five-fold since 2004.

When it comes to individual loan amounts, boomers tend to face bigger debt loads than other groups. The Fidelity analysis found that boomers had an average monthly loan payment of $620 as of Sept. 30, 2021. That compares to $490 for Gen X, $510 for millennials, and $480 for Gen Z.

On average, boomers had a $58,000 loan balance vs. $51,000 for Gen X, $46,000 for millennials and $28,000 for Gen Z. Average interest rates were 6% for boomers, 5% each for Gen X and millennials, and 4% for Gen Z.

It should be noted that Fidelity’s $515 monthly average for all groups is higher than the estimates from education data providers, which have an average of $390 based on the total number of borrowers and the outstanding student-debt burden in the United States.

And those payments will be resuming soon. While some lawmakers have tried to extend student loan relief and even forgive loans for millions of borrowers, so far there hasn’t been much support from Congress.

As it stands, Biden extended the student loan pause to May 1, which means borrowers only have a couple of months left to figure out a strategy. For many seniors it will be difficult — especially those who lean heavily on Social Security income to pay the bills.

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Find: Top Tips From Gen Xers Who Have Paid Off Their Student Loans

To prepare for the resumption of payments, Pentis recommends contacting your federal loan servicer to ensure your account is in order. Also, if you have been on an income-driven repayment (IDR) plan, make sure you still qualify for the plan and that it is up to date.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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