A new study focuses on the savings rate that people in a workplace retirement savings plan need in order to achieve a more secure retirement.
Dec. 14--Julie Iverson feels a heady mix of hope and anxiety months before her college graduation at age 56.
She is hopeful she will line up financing for a pet supply shop, where her two golden retrievers will greet customers. Failing that, she trusts her St. Paul College entrepreneurship degree will help replace the job the Great Recession claimed.
But she also worries about repaying $30,000 in student loans well into her 60s.
"I am certainly daunted by what's ahead of me," said Iverson, of Minneapolis.
A growing number of Americans 50 and older face student loan payments, defying the conventional wisdom of college debt as a concern of those in their 20s and 30s.
The economic downturn added to the already swelling ranks
of those arriving on campus later in life to shift career gears. And more parents are taking out or co-signing loans for their children's education.
Student loan debt can be more unsettling in those later years, when it can throw off retirement plans or collide with medical bills. Mixed with stories of successful midlife reinventions are those of garnished Social Security checks and trips to bankruptcy court.
When the economic downturn hit, Iverson was laid off from her job as an information technology director at a local nonprofit. She'd taken the job when she and her husband separated; the couple had run a successful IT consulting business for years.
"I found myself without a job and without much of an education,"
said Iverson, who had some college credit at the time.
After struggling to find another job, she enrolled in a St. Paul College entrepreneurship class in the spring of 2011. Mostly, she wanted to get her mind off things.
A year and a half later, she cuts a familiar figure on campus, with her flowing grey hair and a textbook-packed rolling suitcase instead of one of the ubiquitous backpacks. She is a Student Senate member with a 3.9 GPA.
Student loans made it possible, she says. She used the last $2,000 of her federal loan to keep up with a mortgage payment. After some soul-searching, she took out a private loan with a variable interest rate last year.
A study released by the Federal Reserve Bank of New York this year showed 6.8 million Americans age 50 or older make up almost a fifth of student loan borrowers nationally, up from less than 13 percent in 2005. Last year, borrowers 60 or older alone shouldered $36 billion of the ballooning national college debt burden -- at $870 billion handily outpacing both credit card debt and auto loans.
Almost 10 percent of borrowers older than 50 are delinquent on their student loans.
Seth Boffeli, a spokesman for the AARP of Minnesota, said the senior citizen advocacy group brought up the Fed study in forums with seniors to highlight financial pressures they face: "Most ... were shocked to hear about it."
Experts suspect the majority of borrowers that age owe for children's or grandkids' student loans. According to the nonprofit Institute for College Access and Success, or TICAS, the annual volume of federal Parent PLUS loans rose almost 37 percent in just two years, to $10.4 billion in the 2010-11 school year.
Amid the economic uncertainty, private lenders are also pressing more parents to co-sign on children's loans after they've taken out the maximum federal loans allowed.
More people out of a growing pool of baby boomers are also enrolling to seek an edge on a tight job market or a second
career. In the past decade, the total Minnesota graduate and undergraduate student population swelled by about 35 percent. Meanwhile, the number of students 35 and older went up by close to 80 percent.
Things are looking up for Denise "Dee" Moy of Oakdale.
She'll graduate in the spring from St. Mary's University with a social services degree and already has found a job at a St. Paul home for men recovering from addiction. Her time on campus energized her after a long stretch of futile job-hunting that drained her family's savings.
Since arriving at St. Mary's with an associate degree from Dakota County Technical College, the 57-year-old earned a Rotary Club scholarship and the moniker "Mom" from fellow students.
The only thing that brings her down: that her student loans -- about $70,000 -- will likely keep her from ever retiring.
"I will be paying this off till the day I die," Moy said. "That thought scares the bejeebers out of me."
Steve Sabin, president of the Minnesota State College Student Association, said he hears countless success stories of graduates easing into second careers, especially in health care and business.
But when borrowers stumble, the fallout can be harsher the closer to retirement age they are, says Mark Kantrowitz, a college financial aid expert. He cites a study by the financial website SmartMoney: The government garnished up to 15 percent of the Social Security checks of 115,000 retirees with delinquent student loans in the first half of this year.
Local bankruptcy attorneys say they are seeing more clients in their 50s and 60s with student loans, a rarity in the days before the economic crash. And there's hardly anything they can do about those loans: Federal and private student loans cannot be cleared in bankruptcy, except in extremely rare cases.
Attorney Barbara May says she's seen an influx of parents blindsided by co-signed loans their children are grappling to repay in the downturn. She recently tried in vain to advocate for a couple in their 50s whose son had died of Lou Gehrig's disease. The parents were still on the hook for thousands of dollars in student loans they had co-signed.
"I think we're going to have a whole generation that doesn't get their full Social Security checks because they owe student loans," May said.
Craig Andresen, the Minnesota state chair of the National Association of Consumer Bankruptcy Attorneys, says he sees would-be clients struggling with loans they took out in hopes of kick-starting a second career. Now, he says, they are "in a permanent state of servitude."
After several earlier cracks at college, Francis Ferrell, 66, of Vadnais Heights felt an immense sense of achievement when he got his bachelor's in English and communication from St. Paul'sMetropolitan State University in 2000. He was glad he did it even as he found it hard to switch careers in his 50s and continued working as a bus driver.
Then, his health started flagging. In 2004, with $10 in their bank account and almost $8,500 in medical bills, he and his wife filed for bankruptcy. He cleared his debts, save for the student loan.
Unable to continue as a driver because of his pacemaker, Ferrell started receiving Social Security disability in 2007. He kicked off a bid to secure a disability discharge of his student loan, a process he said stretched out for years.
His cardiologist and his primary care doctor filled out numerous forms. He spoke with more than a couple dozen customer reps before finally getting the discharge this year. His lender will monitor his income in the coming years, though, he said: "The loan is still hanging over my head."
Older borrowers should peer far into the future before taking out a student loan, experts say. They have a narrower window of opportunity to recover from financial setbacks and need to plan for retirement.
Kantrowitz' advice: Weigh your costs against your likely income after graduation, and never borrow more than you can reasonably pay back in 10 years or before retirement.
Lauren Asher, president of TICAS, said borrowers should study the loan terms, including the repayment options if they hit hard times. Many private lenders don't offer disability or death discharges. And if you do stumble on a rough patch, she said: "Talk with your lender. Don't bury your head in the sand."
When it comes to co-signing on private loans, bankruptcy attorneys and some experts agree: Don't do it.
"I tell my kids that as much as I love them, I would never co-sign for a student loan for them," May said.
Loans are on Iverson's mind as she nears graduation, without health insurance and much of a retirement cushion. She and fellow students have compared interest rates and terms. She recently asked an instructor if her nephews and heirs would be on the hook if she dies before paying everything off. But she also cringes at the idea of taxpayers getting stuck with her bill.
"I am not disheartened by any means," she said. "It just feels like an uncertain future."
Mila Koumpilova can be reached at 651-228-2171. Follow her at twitter.com/MilaPiPress.
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