While the common view of those who carry significant amounts of student loan debt as young adults who are just starting to become financially independent is still accurate, a growing number of people with student loan debt — and in default — are much closer to retirement.
New data from Barclays shows that about 15.5 percent of people in the U.S. who carry student loan debt are between the ages of 50 and 59, and another 4.2 percent is held by people 60 and older, according to a report from the Chicago Tribune. Further, many of the older borrowers are past due on their student loan payments. In all, loans carried by those 50 and up account for 16.9 percent of the total value of past-due balances, with those older than 60 making up 4.8 percent of that figure.
[Credit Score Tool: Get your free credit score and report card from Credit.com]
In all, the average amount of student loan debt held by those 60 and older is about $18,250, the report said. And because those people are typically within a few years of retirement, it becomes increasingly unlikely that they will be in a financial position to pay back their lenders once they stop working.
“[T]here is little reason to think that someone in retirement will suddenly attain the means or motivation to make on-time payments after having gone years without making them,” the Barclays report said, according to the newspaper.
Further, the statistics showed that defaults on federal financing, which do not require credit checks but make up some 90 percent of the total U.S. student loan market, would continue to be a problem for the government, the report said. This will become especially problematic because experts note that delinquency and default rates on these lines of credit have been steadily rising in the last year or so, and will likely continue to do so for at least the foreseeable future.
Currently, Americans owe a total of more than $1 trillion on their total student loan balances, the report said. That’s more than what is owed on auto loans and credit cards combined.
[Student Loans: Research and compare options for student loans at Credit.com]
Fortunately, many people who will be seeking new federal student loans this summer got a bit of a reprieve earlier this month. Federal education financing interest rates were set to double at the beginning of July and were expected to cost borrowers considerably over the life of the loan, but Congress voted to maintain the lower rate for another year.
Image: Amanda Mar, via Flickr