Seniors seeking a college education may be indebted forever
- In 2017, more than 620,000 degree-seeking students were age 50 and older, according to one study.
- People in this age group are increasingly willing to take on debt needed to get a degree and a better job.
- But anyone considering such a move needs to answer some tough questions before going down this costly road.
For someone over 50, the idea of returning to college to start a new or more exciting career may sound tempting. That's especially true if your current job is boring, you're underpaid or your former employer forced you into early retirement. But financial pitfalls could stand in the way of older students seeking that sheepskin, such how to pay for it and whether the earnings expectations justify the potential debt incurred.
Nevertheless, many baby boomers -- and soon-to-be-seniors -- are jumping into the education pool and heading back to the ivy halls with high hopes and a willingness to take on the debt needed to get it done. The Digest of Education Statistics showed that in 2017 -- the last year it kept count -- 626,193 students age 50 or older were enrolled in degree-granting postsecondary institutions, representing more than 3 percent of the total student body.
- Life and Debt: Seniors owe billions in student loan debt--"This will follow me to the grave"
- Life and Debt: Millions struggle under the burden of student loan debt--"I had panic attacks"
Their admission into higher education is boosting an already enormous student loan debt of $1.5 trillion, or $47,000 for the average student household. That can be very tough on people like Seraphina Galante, who received a master's degree in social work in her 50s with the "help" of student loans, and now at age 76 and near end of her career owes more than her original loan amount.
Older people considering a second -- or even first foray into college -- should look beyond all the internet ads offering free, or virtually free, college tuition and ponder the following questions:
How many more years do you want to work?
While it used to be commonplace for people to work until age 65, the popular notion now is that they can stay on the job into their 70s. But Squared Away, a blog from the Center for Retirement Research at Boston College, points out that one in four workers -- even in their mid-50s -- will eventually encounter difficulties on the job because "their bodies start breaking down."
When a newly diagnosed disabling condition is termed long-lasting, 63-year-olds are twice as likely to stop working than others their age, according to Princeton, New Jersey-based policy research firm Mathematica, which followed the path of a "fairly healthy group" of 55-year-olds through age 67. Many left the workforce as early as age 59.
Squared Away also warns that the perils of aging "escalate" once you turn 75 and that cognitive disability affects a quarter of seniors in their 80s. Many seniors are still able to work even at that age, but companies tend to analyze this type of statistic and seem reluctant to hire older workers -- particularly for full-time and strenuous jobs, such as those involving travel.
Can you afford to stop work?
For couples holding down two jobs with both contributing to a 401(k), losing of one source of income if either decides to go to school not only means less money for the household, but less put away for retirement. The difference can be substantial: When one leaves the work force, the couple saves 4 percent less, from 9 percent of household income to 5 percent, according to the Center for Retirement Research.
Should you take on student loan debt?
The U.S. isn't known for spending on retraining. While Denmark spends 0.6 percent of GDP to train workers to stay in the workforce and Germany devotes 0.2 percent, this country offers a minuscule 0.03 percent to help workers attain a new and more complicated job, according to the Hechinger Report, which is devoted to financial aid.
Companies in general are less likely to invest in educating older workers whose value in terms of future years of employment is lessened. In the U.S., individuals bear the burden of retraining rather than the company, and the bulk of the funds needed for the next career come from those seeking it.
Reflecting this is that the number of student loan borrowers age 60 and older has jumped by at least 20 percent in every state from 2012 until now, according to the Consumer Financial Protection Bureau. Those over 60 now owe almost $67 billion in student loan debt, nearly double the average a decade earlier, said the bureau.
However, much of this isn't their fault. They're also paying off -- and drowning under -- the student debt they co-signed for and assumed when their children or even grandchildren attend college. The massive amount of student loan debt disproportionately affects seniors now and will only get worse if they take on more.
One nightmare scenario: Unlike other forms of liability, such as credit card debt, little help is available from bankruptcy protection for a student loan default. And the government can reduce Social Security payments if it doesn't get its loan money repaid. An estimated 5.2 million student loans are already in default.
Is the debt worth it?
For seniors seeking a second career through advanced degrees, one unanswered question is whether the courses taken will actually help them find jobs. Many colleges and vocational schools boast that they can get graduates hired in the current "full-employment" economy. But a recent Brookings Institution report noted that online for-profit education is "particularly poor" when it comes to completing a course of study and "earnings after leaving school."
