Most young students plan their education expenses to take their end within a few years after they get a job. However, a new report shows that these plans are not aligned with what is really happening. Some cases take a longer period of time to cover these costs. What is worrisome is that more senior citizens than expected with ages of 60 and more still have to deal with student loans.
The Consumer Financial Protection Bureau has just released a new study that signals some major national concerns. This research found out that in 2015, there were more than 2.8 million American citizens over 60 who still had to pay their student loans. As a comparison, in 2005, this number was of only 700,000. The total sum of such accumulated expenses is estimated at $66.7 billion.
These costs are not generated by their own educational choices, though. The majority of these debts appeared as the will of parents and grandparents to financially support young people during their student years. The report shows that 73% of indebted senior citizens over in their 60s are in this position as they wanted to cover the expenses for their children or grandchildren.
This situation became possible as many student loans oblige the young people to co-borrow the financial support with a family member. The report found that more than half of these co-signers are over 55. The average owed amount is yet another factor that grew in time. In 2005, senior citizens had to pay an average of $12,000, whereas this number increased in 2015 to up to $23,000.
This discovery is also signaling a concerning issue regarding the financial state for many American senior citizens. Considering the fact that almost three-quarters of people aged 65 or more rely solely on Social Security after their retirement, the student loans are likely to increase their burden in the following years as well.
One of the conclusions of the CFPB report is that the student loans stipulation of a co-signer can lead to a negative outcome. While young people are expected to increase their revenue in time, senior citizens experience the other way around. This situation makes them unsuitable to handle the education payment for their children or grandchildren.
The report concludes that the co-signers need to benefit from better counseling services. Lenders have the moral obligation to warn their clients of all possible liabilities that this type of contract can generate. However, the document lacks any suggestion regarding federal regulation of student loans.
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