OK, this is a funny twist on two otherwise unrelated topics: Boomer privileges and student loans.
Even though boomers are rich, privileged, parasitic schmucks unworthy of their wealth, invariably there are some individuals for whom that's not true -- who are poor, down on their luck, couldn't ride the asset wave the rest of their cohort did etc, etc.
Alas, here the WSJ journo found someone with student debt!
Funky, fuuuunnky
I feel yous, Chris and Carolyn.
That extended the life of their loan, and compounding interest charges kept pushing up their balance
Student loans are increasingly following Americans into their 60s and rewriting what they believed would be their retirement years. More than three million people 62 and older owe federal student loans, up from 1.8 million in 2018, according to Education Department data.
uh-hu:
Baby boomers with federal student loans owe an average of roughly $45,000, more than three times that of borrowers 24 years old and younger, who owe about $13,800 on average.
eeeeh, oops. Didn't know about this:
Many are in a similar situation because of the Trump administration’s overhaul of federal student loans, which goes into effect July 1. The changes include repayment plans that could push up monthly bills and require more payments before debt can be discharged.
Sharon Durkee, 72, imagined she’d be traveling to Germany and Sweden to visit her relatives during her retirement. Instead, she has been applying for part-time jobs to chip away at her $101,000 student-loan balance, which she juggles on top of her mortgage payments and other costs.
Nice, and I applaude Durkee for this but there seems to be an obvious, eh, fix here
... “I owe more in student debt than I owe on my house,” said Durkee, a resident of Medford, N.J., who has a master’s degree in social work. Durkee’s main income source is a pension from her past job and Social Security.
...eeeh, in our financialized times there seems to be an obvious fix to this too!
archive: https://www.wsj.com/personal-finance/student-loan-debt-retirement-865978d2
Sounds like the rules changed after they got the loans.
Student loans can no longer be discharged via bankruptcy.
Its understandable the reason why: Because education is an intangible thing with no equity value. If I give you loan to buy a car, I retain a lean on the physical vehicle and if you default I regain control over the car.
If I give you $100K for your "education" and you default I get nothing.
However, it has created very perverse effects. If student-loan borrowers were allowed to default it would increase the interest rates for other borrowers, making the loans more expensive. Which would in turn put downward pressure on the cost of tuition
An alternative system would be something like the old patronage system of middle ages. Companies would send you to college but then mandate that you must work for them for 10-15 years post graduation
All in all that may be more directly beneficial for all parties.
I have an older relative who decided to go to grad school for a career change, when the obviously sensible thing would have been to retire and just volunteer in a related capacity (mental health).
I'm pretty sure she has outstanding student loans from that still, plus the stress of trying to start a new business in a new field.
The prospect of a stress free retirement sounds good on paper, but the reality is boring as hell.
I can imagine that, but putting yourself unnecessarily into a financial situation where you have to keep earning doesn't seem wise. There's no room to even take time for highly likely medical situations.
Oh yeah. It's not wise, but it gives you something significant to worry about. That's priceless for those (of us) addicted to stress and anxiety.
I guess I was addicted to stress and anxiety too. The sudden reduction in stress after I retired almost killed me.
#591256
Wow! I didn't consider that possibility.
I'd love to read a really good study on the distortions caused by the special rules of student loans in the US. The weird rules around discharging student loans in bankruptcy and the way they get subsidized has got to lead to messed-up signals.
Let's see the higher-education system be forced to deal with market rates for their services.