More than 16 percent of the nearly
"It's one of the largest economic issues of our time, and it's not just a young person's issue," said
Many of the borrowers have taken out loans later in life -- often for retraining to stay afloat in a changing economy. Some wound up on the hook when they co-signed or took out loans for children and grandchildren.
"I'm 63 years old and they're chasing me on a student loan?" Jones said. "They want to keep taking money from me until I'm dead."
Jones' 44-year-old case is an outlier, but around the country older people are struggling with student-loan debt at a time when their earning power may be waning. Many, like Jones, never completed the degrees that could have generated a return on the investment in the form of higher wages earned by college graduates.
The root of the phenomenon, experts say, lies in the escalating costs of college juxtaposed with a stalled economy. The Federal Reserve has noted that "the dramatic increase in debt implies that a fundamental change has taken place in the way we finance higher education in the U.S."
She noted that the number of borrowers taking out federal Parent Plus loans for their children's schooling has increased since the recession when housing prices dipped and home equity loans and lines of credit were scaled back.
"I feel awful," she said. "This is a whole tangled web of bad. I know some people's grandparents who are taking out loans."
"I thought it would make me more employable so I thought I would be able to make that money back with no problem," said Mainville, now 56. But the job market tightened while she was in school. She has applied for dozens of jobs, with no luck. "One job I applied for had 400 applicants," said Mainville, a
Mainville was able to qualify for a federal income-based repayment plan, and is making regular payments to whittle down the
The Obama administration's new repayment options have offered easier terms to some borrowers, but defaults have still risen. Nearly seven million are in default with a total of more than
"This is not a rare situation; unfortunately it's all too common," Chopra said. "And the consequences are severe."
For Jones, the default has been costly. He has paid more than
The fees pay for the lawyers who are contracted by the state to collect on the federally guaranteed private loan. Jones, who was laid off from his warehouse job this year, made sporadic payments on the loan over the years and declared bankruptcy in 1996. Going bankrupt, however, does not allow a borrower to stop paying back student loans.
"There is very little in the legal system that has no statute of limitations, maybe only murder or treason," said
The garnishment of
"I'm one step from homeless," he said.
Those who default on loans may have made financial missteps, but many were young and uninformed when they made the commitment and never got the benefit of a degree, said
"The risks of going to college are completely downplayed; in fact they are ignored. A big part of the problem is that schools have no skin in the game," Vedder said, noting that colleges face no penalties if the loans are in default.
Vedder said the availability of federally backed loans has fueled tuition increases that have far outpaced inflation and put college out of reach for the very low-income students who were supposed to benefit from the federal money. "It's a dysfunctional system that's not achieving its paramount goal."
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