The Consumer Financial Protection Bureau (CFPB) released a report Thursday (Jan. 5) that shows the impact of student loan debt on long-term financial security, with the government watchdog reporting it does in fact create a lot of financial strife down the road.
According to a the CFPB, over the past decade the number of student loan borrowers who are older has quadrupled with the amount of debt borrowed close to double that of younger borrowers. The CFPB said in many cases, the older borrowers are taking out student loans for children and grandchildren. The CFPB reported that older borrowers who are having a tough time making their student loan debt repayments complain that they face challenges in enrolling in income-driven repayment plans and accessing protections afforded them as cosigners to the loans. According to the CFPB, in 2015 close to 40 percent of federal student loans borrowers age 65 or older were in the default stage with the loan.
“It is alarming that older Americans are the fastest growing segment of student loan borrowers,” said CFPB Director Richard Cordray in a release highlighting the findings. “Many of these older Americans are helping to finance their children’s or grandchildren’s education while living on a fixed income. We are concerned that student loans are contributing to financial insecurity for many older Americans and that student loan servicing problems can add to their distress.”
In October, the CFPB announced one in three rehabilitee student loans borrowers will default for a second time within two years. The CFPB said the reason for the defaulting could be potential gaps between student loan programs. The bureau estimated back then the defaults will cost consumers $125 million over the next two years in unnecessary interest charges.