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Student Debt is an Economic Concern for Borrowers of All Ages

In response to a question in ASA’s Life Delayed survey, we found:Has your student loan debt negatively affected/impacted your ability to do any of the following?

55% say it has impaired their ability to buy a home

60% say it has impacted their ability to take a vacation

52% say it has limited their ability to buy a car

35% say it has even limited their ability to purchase daily necessities

62% say they have delayed saving for retirement because of their student loans

• Older borrowers are increasingly burdened by student debt, leading to long-term economic concerns

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Student Debt is an Economic Concern for Borrowers of All Ages

29%

62%

119%

385%

111%

187%

323%

977%

0% 200% 400% 600% 800% 1000% 1200%

Less than 25 years old

Age 25-49

Age 50-64

Age 65 and over

Percentage increase 2005-2015Source: GAO

Debt balance Number of Borrowers

Quick Statistics on Seniors with Debt

• 867,000 households are headed by someone 65 or older who carries student loan debt

• Over 173,000 Social Security recipients, including those receiving retirement, survivor or disability benefits, had their Social Security garnished in 2015 due to student loan debt.

• Of this group, 32,400 were over the age of 65, a 540% increase from the level of 6,000 in 2002

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Reasons for Growing Student Debt Among Older Americans

1. Increasing college costs have lead to greater borrowing• Today, 66% of all students in MA attending a public or nonprofit college borrow student

loans with the average debt amount for an undergraduate now reaching $31,466 upon graduation

Source: The College Board, Annual Survey of Colleges; NCES, IPEDS data. 4

$10,680 $14,630

$19,920

$26,380 $29,700

$33,480

$2,600 $3,110 $4,560 $6,860

$9,650

$1,190 $1,450 $2,250 $2,680 $3,520

1976-77 1981-82 1986-87 1991-92 1996-97 2001-02 2006-07 2011-12 2016-17

College Tuition and Fees Increase over 40 YearsPrivate Nonprofit Four-Year Public Four-Year Public Two-Year

2. Federal loan repayment plans have extended repayment timeframes• According to the Brown Center for Education Policy, over an 18 year period, the average

time it takes to pay back a federal loan has nearly doubled.• However, other estimates say that the average repayment time is significantly longer

• Mark Kantrowitz estimates the average time is 16-18 years• A survey from One Wisconsin Institute puts the average time to pay back a

bachelor’s degree at 19.7

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Year of Loan Origination Average Time to Pay Off

1992 7.5

1995 8.8

1998 10.5

2001 9.9

2004 13.7

2007 14.1

2010 13.4

Source: Brown Center for Education Policy at Brookings

Reasons for Growing Student Debt Among Older Americans

3. A shift in age demographics of college students• In 2014, 40% of students entering a degree granting post secondary institution were over

25 years old. (National Center for Education Statistics). This is up from 27% in 1970. • The average age for a community college student is now 29 years old

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27%

40%

0

2000

4000

6000

8000

10000

12000

14000

1970 1980 1990 2000 2007 2014

Num

ber o

f stu

dent

s (in

thou

sand

s)

Number of Students Enrolling At Age 25 or Older

Reasons for Growing Student Debt Among Older Americans

4. Parent loans• 3.3 million parents are repaying over $75 billion in outstanding Parent PLUS loans• National Center for Education Statistics reports that 20% of parents took out Parent PLUS

loans for their child’s education in 2011-12, up from 12% in 1999-2000, and just 4% in 1989-90.

Source: GAO analysis of data from the National Student Loan Data System, Department of Education. | GAO-17-45

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Parent Plus Borrowers Less than 50 years 810,144 771,214 745,804 762,334 817,605 902,752 992,632 985,722 937,795 905,399 915,960Parent Plus Borrowers age 50 to 64 1,077,817 1,059,602 1,085,746 1,177,766 1,316,362 1,484,615 1,656,568 1,764,217 1,841,956 1,917,582 1,975,287Parent Plus Borrowers age 65 and older 65,394 66,819 70,862 79,304 88,905 101,504 117,616 141,064 162,456 186,142 210,256

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Number of Plus Loan Borrowers by Age

Reasons for Growing Student Debt Among Older Americans

• Financial education and targeted advice can help• Only 1/3 of respondents in ASA’s survey said they fully understood the amount

of debt they were taking on when they first took out student loans

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What Can Be Done?

…Say they did not understand at all

…Report they fully understood the debt they were taking on when they took out their loans

20%...

38%...

9

22% 19% 17%

34% 38% 35%44% 43% 48%

0%10%20%30%40%50%60%

Budgeting Loan repayment Best practices for future

financial health

Formal Informal No Education

Few have had formal education that would help prepare them to best manage debt

“Please select the answer option that best describes your education, either formal or informal, on the following financial topics”:

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A majority feel unprepared to manage the financial obligation

“Prior to graduating college, do you feel that you were properly prepared to manage the financial obligations when your student loans came due.”

Yes, 39%

No, 53%

Unsure, 8%

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They want financial education, even after graduation

15%

15%

13%

19%

35%

3%

Senior YearJunior YearSophomore YearFreshman YearAt any pointOther (please specify)

At what point during your time as an undergraduate would this type of financial education/loan repayment counsel have been most valuable?

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75%

77%

79%

79%

80%

82%

83%

Counseling on how loan debt may impact my career choices

Counseling on how loan debt may impact my future life choices

General training on how to maintain a budget

Training how to incorporate loan repayment as part of my post-graduation living expenses

Strategies on how to get the education at the most reasonable cost

Different repayment options potentially available

Options on how to reduce student loan debt, e.g., scholarships or grants

They want financial education, even after graduation

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They want financial education, even after graduation

Once out of school, how valuable would/will be the following types of information/resources?

81%

82%

84%

10% 20% 30% 40% 50% 60% 70% 80% 90%

General training on how to maintain a budget

Training how to incorporate loan repayment as part of my post-…

Different repayment options potentially available for me

Engaging Students With Financial EducationTitle 14

What We’ve Learned…

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1. Prioritize/require financial education2. Seek support/endorsement from trusted

individual 3. Personalize program4. Provide timely and relevant content

Financial Education Needs to be a Priority or Requirement

Presentation Title 16

Prioritize/Require Financial Education

Presentation Title 17

Boys and Girls Club of Dorchester

• Financial literacy and higher education planning program for summer interns

• Courses on budgeting, money management, financial fundamentals and education planning

Forman S. Acton Educational Foundation

New Scholars Returning Scholars

• Complete courses on budgeting, credit debt management and student loans

• Participate in online training sessions and discussions

• Attend one-on-one counseling sessions

• Participate in online training sessions and discussions

• Attend one-on-one counseling sessions

• Build financial plan

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Prioritize/Require Financial Education

Presentation Title 19

• Integrated budgeting, credit/debt management and student loan repayment topics into three core courses:– First Year Experience– Foundations of Quantitative Reasoning– Senior Seminar

• Support from VP of Academic Affairs

Dean College

Prioritize/Require Financial Education

Support From Trusted Individual is Key

Presentation Title 20

Support/Endorsement

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Professors; Senior

Administration

Director of Scholarships;

Senior Leadership

Vice President of Programming;

Club Staff

Program Needs To Be Personalized

Presentation Title 22

Personalized Programming

Presentation Title 23

Forman Money Management Program

Personalized Programming

24

Gates Millennium Scholars Alumni Association

Content Needs to Be Timely and Relevant

Presentation Title 25

Timely, Relevant Content

26

Presentation Title 27

Catholic Memorial School

Timely, Relevant Content

Students Are Learning…

Presentation Title 28

Outcomes

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Boys and Girls Club

54% increase in those who understand how to calculate annual savings potential

49% increase in confidence about understanding the financial aid application process

129% increase in those who said they would know what to do if they were a victim of identity theft

54% increase in those who said they understand loan rates, terms and limits

• Budgeting

• Money Management

• Financial Fundamentals

• Educational Planning

Outcomes

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73%Will make attempt to pay off credit card debt more quickly

78%Plan to keep track of personal spending

“…As a person who is not fully in tune with my financial situation [the course] helped put into perspective what I need to focus on.” —Student, Dean College

Dean College

115% increase in those who said they have a sense of what their future earnings need to be to repay student loans

After taking the courses…

Presentation Title 31

“It's great to talk about what's happening in my life with someone who genuinely cares! Talking to [my Salt counselor] about my finances was at first daunting as, let's face it, it can be an intimidating topic for college students. But with time she helped me realize that I'm already raising important questions about the future and my financial situation.”

–Forman Scholar