Tess Vigeland: The soaring cost of higher education resulted in yet another round of campus pepper spray this week. Students at Santa Monica College gathered to oppose the idea of a two-tiered pricing system for tuition. Police sprayed them to break up the protest, sending three students to the hospital.
And it turns out college costs aren't just a plague on the young. The Washington Post reports people age 60 and over owe about $36-billion in student loans. Some went back to school later in life. Some borrowed to help out their kids.
We asked Marketplace's Amy Scott to look into it for us. She joins us now from the Education Desk at WYPR in Baltimore. Hi there.
Amy Scott: Hi Tess.
Vigeland: How common is this really for people to still be paying off student loans this late in life?
Scott: Well, only about 5 percent of borrowers are 60 and over, according to recent data from the Federal Reserve Bank of New York. But it's still a significant number. You know, you hear a lot that student loans follow you to your grave, because unlike most consumer debt, they're very hard to get rid of in bankruptcy. So this sort of gives a new meaning to that phrase. People are still dealing with this pretty late in life.
Vigeland: Wow. How much of this is, I guess, people paying off their own debts versus maybe their parents, who co-signed a loan for their kid maybe?
Scott: Right. Some parents took out Federal Plus loans to help pay for their kids college or maybe co-signed on a private student loan for a kid or even a grand kid. But you know, lots of people are going back to school alter in life, both to finish college the first time around and maybe for job re-training, especially in this economy. I talked to one of those people, Faith Halpern, who lost her job in midlife, went back to get her MBA. She's been in and out of work, had to stop paying a few times. Meanwhile, the loan ballooned, and 15 years later, she says she's still paying $500 a month and barely making a dent in the principal.
Scott: And you know, I asked her if it was worth it.
Faith Halpern: This has helped my career, yes. And it helped me mentally, absolutely. But if I had that choice knowing about student debt, I would never do it again. Never.
Scott: And you know Tess, Halpern got her degree. A lot of these people don't finish. So they end up with all this debt and not much to show for it in the end.
Vigeland: Wow. Well, I suppose it's also a different situation for them versus someone who's younger, becauseyou knoww, they're hoping to retire. They've got a lot less working years ahead of them.
Scott: Right. And often they have a harder time finding jobs, if they're out of work. I talked with Deanne Loonin with the National Consumer Law Center. She has a lot of older clients, many of them are struggling to pay student loans. And she says seniors are also more likely to have health problems, and they're often on fixed incomes.
Deanne Loonin: The lifeline that we have for older people in this country, Social Security, can be taken by the government to collect student loan debt or at least portions of it can be taken. Which is really extraordinary and it takes away some of the peace of mind that people have as they get older.
Scott: And she's talking about federal student loans there. For federal loans, there's no statute of limitation. So there's no limit on how long the government can go after that. Loonin told me about a client she had a few years ago who took out a loan in the 1970s. He had severe health problems, he was homeless for a while. So the debt really grew, and here he was, 40 years later, and the government was still taking portions of his Social Security check.
Vigeland: Whoa. As you mentioned also the complicating factor here is that you can't just file for bankruptcy, so is there anything people can do if they're dealing with this kind of debt, any options?
Scott: Well, with federal student loans, you can often work out a deal to pay based on your income. So the less you make, the less you have to pay monthly. If you have a permanent disability, you can sometimes get the loan forgiven completely. With private lenders, it's tougher. They don't have to do anything for you, but many will work with individual borrowers to lower their interest rate or work out some kind of extended repayment plan. There is some effort in Congress to change bankruptcy law, so that at least private student loans will be treated like other forms of consumer debt, so you can get out from under them in bankruptcy. But advocates of that say it's not likely to pass any time soon.
Vigeland: Marketplace's Amy Scott joining us from Baltimore. Thanks so much.
Scott: You're welcome.
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