Student loan debt is soaring among adults age 50 and older and is likely to dramatically cut into their ability to save for retirement, according to a new AARP report

By December of last year, borrowers age 50 and older had student loan debt that had mushroomed to $289.5 billion, up from $47 billion 15 years ago. Today Americans age 50 or older account for 20 percent of the $1.5 trillion student loan debt in America, the report said.

In addition to borrowing for children and even grandkids, "many people are carrying their own student loan debt for longer periods of time,” said Lori Trawinski, AARP's director of banking and finance and lead author of the report.

“In the pre-retiree years, which we typically consider to be ages 50 to 64, people should be at their peak earning years and also accumulating retirement savings, hopefully at adequate rates. To the extent that their budget is squeezed by the need to make student loan repayments, it's no doubt cutting into their ability to save for other purposes," Trawinski said.

In addition to potentially carrying their own balances, many older Americans are also signing for or co-signing for childrens’ and grandkids’ student loans. “Paying for higher education is becoming an intergenerational burden, ensnaring more older adults and delaying or battering the retirement plans of many,” the report said.

Beyond the repayment burden, default rates on the student loan debt have become a threat to Americans’ retirement security, making it possible for the federal government to take up to 15 percent out of derelict borrowers’ monthly Social Security benefits.

In 2015, about 29 percent of the 6.3 million borrowers ages 50-64 were in default, meaning payments on their student loan were at least 270 days past due. Among the 870,000 people over age 65 who had student loan debt that year, 37 percent were in default. 

AARP surveyed more than 3,000 Americans age 40 and older about how they financed higher education for their loved ones. The survey found that among adults 50 and older, cosigning a private loan was the most common way to help pay for someone else's education, something that 45 percent of respondents did. Among the cosigners, 25 percent said they had to make at least one payment on the loan, an expense that caught many of them by surprise.

In fact, almost everybody who needs a private student loan is going to need a parent or grandparent to be a cosigner on it, according to the National Consumer Law Center’s Student Loan Borrower Assistance Project.

As many financial advisors know, growing student loan balances among this group are without a doubt a shock to the retirement planning of older Americans. MIT’s AgeLab recently found that of 100 people in a focus group, 29 who are 50 or older still have student loan debt for their loans or those of loved ones.

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