The recent recession prompted many older workers to return to school to retrain for a new career, but a possible consequence is that these older workers will take on student loan debt that lasts into the traditional retirement years. According to a report by the Government Accountability Office (GAO) the amount of student loan debt held by borrowers age 65 and older increased significantly in the past eight years, from $2.8 billion in 2005 to $18.2 billion in 2013.
This figure is a small fraction of aggregate student loan debt for all borrowers, which GAO estimated to be more than $1 trillion in 2013. However, the debt held by borrowers age 65 and older increased at a much faster rate between 2005 and 2013 than did the amount held by all borrowers.
GAO also found that borrowers age 65 and older were much more likely than younger borrowers to default on their student loans. According to GAO, 27% of student loans held by people ages 65-74 were in default, and 54% of such loans held by borrowers age 75 and older were in default. This compares with a 12% default rate for borrowers ages 25-49.
One possible consequence of default is an offset of Social Security payments. GAO found that about 36,000 people age 65 and older had their Social Security benefits offset in 2013 to pay student loan debt, compared with about 6,000 such people in 2002.
