Student Debt May Be the Next Crisis Facing Elderly Americans

Robert Murphy is 65 and broke. He hasn’t worked since 2002, when he lost his job as the president of Thermo BLH, a manufacturing company in Canton, Mass., after it moved operations overseas. He and his wife, Eileen, live on her salary as a teacher’s aide, which comes to about $13,200 a year. His bank recently began foreclosure proceedings on his house in Duxbury, Mass., which was worth less than his mortgage. Four years ago, hoping for a fresh start, he declared bankruptcy. But there’s one debt he hasn’t been able to erase: the $246,500 he amassed paying for his three children to attend college.

From 2001 to 2007, Murphy took out 12 Parent PLUS loans originally valued at $220,765. Like those made directly to students, Parent PLUS loans are federally backed and almost impossible to discharge—that is, to be forgiven. The total outstanding education loans held by people 65 and older, including debt that financed their own schooling and their children’s, grew to $18.2 billion in 2013, the most recent year available from the U.S. Government Accountability Office (GAO), from $2.8 billion in 2005. That’s twice as fast as the overall growth in student debt. The number of borrowers age 60 and up has increased to 2.2 million, from 700,000 in 2005, according to the Federal Reserve Bank of New York.