People of all ages can be affected by the plight of excessive student loan debt. In fact, 27 percent of student loans held by borrowers ages 65 to 74 were in default in 2013. These borrowers are discovering how student loan debt can get worse with age.
For example, 65-year-old Robert Murphy, whose story has been mentioned in The New York Times and Bloomberg, has amassed $246,500 in debt by putting his three children through college. Murphy is unemployed and at retirement age, but the Department of Education still insists he must pay back his student loans.
Is it reasonable to assume that a man in his mid-60s could ever hope to pay down debts that equal the cost of a high-dollar sports car? It will be up to the Fifth Circuit of Appeals to answer that question.
The Consequences of Student Loans Are Brutal for Senior Borrowers
For senior borrowers with federal loans, the Department of Education can resort to truly diabolical tactics to collect defaulted debts. The Department of Education can garnish Social Security income, which many seniors rely on for daily living expenses.
In fact, Government Accountability Office statistics show 155,000 seniors had their Social Security payments garnished in 2013 over defaulted student loans. Many of these borrowers will never work again, or might be physically unable to return to their former high-paying occupations.
The circumstances of senior citizens with defaulted student loans provide a very strong argument for universal bankruptcy reforms to discharge higher education debt. Fortunately, the bankruptcy case of Mark Tetzlaff could soon be heard by SCOTUS, and may provide borrowers with an easier method of discharging higher education debt.