Rosemary
Anderson, 57, is on the hook for $152,000 in student loans she took
out 20 years ago. The divorced mother of two grown daughters
represents a growing number of older Americans with student debt.
The
50-and-over crowd makes up 17% of $1.2 trillion in outstanding
student loan debt -- a 30% increase since 2005, according to the
Federal Reserve Bank of New York.
Anderson's
loans financed her own education. However, one of the main reasons
for the big increase is because more parents have taken out
loans to finance their children's college education.
"We're
seeing a rise in the number of people with two generations of debt:
People who are paying for their children's education, but also paying
off their old student loans," said Richard Vedder, director of
the Center for College Affordability and Productivity, which
researches the rising costs of higher education.
Older
workers, who have lost jobs, have found it difficult to get re-hired,
leading them to fall behind on repaying their loans. And their kids,
who may have shouldered the burden of repaying their loans,
also haven't been able to find well-paying jobs.
Anderson,
who lives in Watsonville, Ca. fears for her future, when there's the
likelihood of her social security payments being garnished.
Her
fears aren't unfounded. American Student Assistance, a nonprofit that
counsels people with student debt problems, said that
over the past year it has worked with 1,000 Americans who have had
their social security payments garnished to pay for old student debt.
That's a sharp increase from just 200 people in the previous year.
Anderson's
loans are driven from a decision late in life to earn two degrees and
paying for them with loans totaling $65,000 from the government and
various financial firms.
She
earned her bachelor's degree at 37 and a master's degree at 44, both
in human resources. While Anderson has never regretted the decision
to get higher education, the costs have been severe.
After
graduation, Anderson was paying six checks a month to Sallie
Mae, Wells Fargo (WFC) and other financial firms. So she
decided to consolidate all her loans into one big loan with the
Department of Education at the prevailing 8.25% rate.
The
catch was that she could not refinance. Since then, interest rates on
student loans have fallen below 3% and today can be had for 4.66%.
"If
I had taken out a loan with a loan shark I would have been better
off," Anderson said.
The
issue caught the attention of Senator Elizabeth Warren, who
introduced a bill earlier this year to allow millions of people like
Anderson to refinance their student loans. However, the bill was
blocked in June.
Anderson
was counting on the bill for a "last minute stay of execution"
as she calls it.
She
stopped making payments on her student loans about six years ago
after a bout of unemployment, a divorce and tending a brother who
fought AIDS.
Still
she has avoided being technically in default by rolling her debt over
several times and watching the interest compound and the amount of
her loans balloon in size.
Next
April, Anderson won't be able to do that anymore and will have to
make payments of $699 a month until she is 81 years old. She worries
about how she will make ends meet.
Anderson
brings home $3,400 a month from her job in business operations at the
University of California in Santa Cruz. She has a $2,200 mortgage
payment and has to live on what's left, and earning some extra income
by finding odd jobs on Craig's List.
"I
will be working for as long as I'm employable. I will never be able
to retire," said Anderson.
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