Economic Recovery Depends on Our Ability to Contribute to the Economy
Read the report: “The Rising Burden of Education Debt on Older New Yorkers”
December 3, 2020
(Albany, NY) The burden of education debt is not limited to students, it includes their parents and grandparents. Currently, the fastest-growing age-segment of the student loan market is age 60 and older. With New York looking for a speedy economic recovery, solving the education debt crisis means a healthier and more productive state.
“Higher education has been portrayed as the key to unlock the door to opportunity and economic security,” said Shamier Settle, Policy Analyst. “However, we have a one-size-fits-all approach to financing higher education that has strained entire families, pulling older relatives into education-related borrowing. We cannot begin to build back the economy if older people are forced to sacrifice their healthcare needs in order to pay education debt.”
National data on education debt shows that Black students are most likely to take out loans to fund their education. For Black students receiving a bachelor’s degree, 85 percent graduate with education debt, while 69 percent of white, 66 percent of Hispanic, and 45 percent of Asian students graduate with education debt. Black graduates are disproportionately burdened with education debt, which can perpetuate the racial wealth gap as debt payments after attendance or graduation constitute a larger portion of family incomes and budgets.
A Statewide Problem
In New York State, the majority of graduates (59 percent) of both public and private nonprofit colleges in 2018 had education-related debt. Students who graduate in New York borrow more than the average student; New York ranks 15th in the country for the highest average debt of graduates.
In New York State, the number of people aged 60 and older with education loan debt increased by 44 percent from 181,000 in 2012 to 260,000 in 2017. The majority of older debtors’ education loans were for their children’s education.
Older adults take out education loans to see their relatives achieve and as an investment benefiting the entire family. Compared to individuals without education debt, older Americans with education debt are more likely to report that they have skipped necessary health care needs. Education debt can make prescription medicines, doctor’s visits, and dental care unaffordable.
A strong economy needs individuals who can contribute to the economy. Getting a handle on education means younger workers can keep purchasing goods from local businesses, rent or buy homes, and contribute to the quality of life in their local communities. Alleviating education debt for older adults builds financial security and can help maintain health during the pandemic.
- End the garnishment of social security benefits to pay federal student loans. This program provides support to disabled adults, and children, as well as people aged 65 and older who are not disabled but have limited income and resources. This relief should be extended to this population and extended throughout the economic recovery from the current recession.
- At a time when interest rates are low, the interest on education loans should be canceled, and the loans should be refinanced at zero percent interest.
- Public policy on education debt would be improved by the release of data on the ethnicity, gender, and race of education debt holders. Knowing how the burden of debt is distributed would better inform the policy response to this crisis.
- Canceling all education debt is a bold option that centers on public well–being and will, therefore, stimulate the economy which has been stunned by the global pandemic. Instead of making payments on education loans, debtors, especially those over 65, will be able to pay for their health care needs and make purchases from businesses that have been strained due to pandemic mitigation policies.
Read the brief: “The Rising Burden of Education Debt on Older New Yorkers”
The Fiscal Policy Institute is a nonpartisan, nonprofit research and education organization committed to improving public policies and private practices to better the economic and social conditions of all.