Student debt is crushing baby boomers, too

Baby boomers are sinking in a surprising sea of debt ? on their student loans.

They are the latest victims in the $1 trillion student-debt crisis.

And it?s wiping out their retirement plans and taking big bites out of their Social Security checks.

According to the New York Federal Reserve, 12.5 percent of student loans made to borrowers ages 60 and over are more than 90 days delinquent.

And seniors can forget about any refunds on their federal tax returns ? because Uncle Sam can confiscate those as well to cover their loan debt.

More than 2 million senior Americans now face student-loan debt.

This almost certainly wasn?t what they imagined when they went back to school during the Great Recession, or co-signed a private loan for their kids? education, according to student-loan experts.

?The best intentions can sometimes lead to not-so-good outcomes,? said David Flores, a debt counselor and regional manager for GreenPath Debt Solutions.

Indeed, more and more older Americans are falling behind on student loans, according to the latest data from the New York Fed.

The numbers alone are enough to turn those Boomers prematurely gray. The average senior student debtor owes nearly $20,000. No wonder 1 in 8 of them is more than 90 days delinquent.

Flores is seeing them at GreenPath?s Jericho, NY, office, the numbers rising from roughly one a month when he started back in 2006 to about one a day this year.

Cary Carbonaro?s experience is similar to Flores?.

?It?s a problem,? said Carbonaro, a financial adviser at United Capital in Ridgewood, NJ, and Huntington, NY, who counsels a group of widows who went back to college thinking it was a sensible life choice. But now they are into their 40s and 50s, and facing the tough prospect of trying to pay off student loans.

Twelve years ago, outstanding student debt owed by seniors-led households was practically nonexistent. But today, the total student-loan debt for the 60-plus crowd has grown to $43 billion.

What?s more, signs indicate that this debt is becoming an even bigger problem.

A study by the Pew Research Center in Washington showed that the median bill of senior households with student debt has ballooned almost fivefold since 2001, from $2,200 to $12,400.

And it has far-reaching financial consequences that stretch to Social Security payments. Uncle Sam can garnishee up to 15 percent of Social Security benefits if an older American defaults on federal student loans.

Indeed, last year the government raided the Social Security benefits of up to 115,000 retirees.

Adding more misery, the government can also effectively garnishee the refunds on tax returns if a federal student-loan borrower falls behind on repaying loans.

?That?s the scary part,? said Flores. ?If you continue to let the federal-backed loans fall past due or let them get into a real negative status, [the government] can use any means to try to collect, including taking tax returns ? sometimes without any notice.?

The size of that debt shouldered by older Americans may actually be underestimated.

Carbonaro says that while parents who have co-signed on loans are explicitly on the hook if repayments are missed, in reality, those who didn?t co-sign often wind up in the same boat.

Many parents, says Carbonaro, still feel responsibility for their children well into adulthood.

Source: http://www.nypost.com/p/news/business/loans_get_tin_old_rru5PFyx5lwXfbnMor6D6J

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