'Going to college ruined my retirement': How student debt is crushing Americans in their 60s

Student loan debt in the United States has spread far beyond young borrowers, emerging as a social burden that now threatens the retirement security of older Americans. As decades-old loans linger unpaid and more parents who covered their children's tuition continue repaying debt well into retirement, about 3 million older Americans are still making student loan payments today.

The Wall Street Journal recently ran a report headlined "They're in Their 60s and Can't Retire Because of Student Loans," documenting a rapid rise in cases where student debt is derailing retirement plans.

Among those profiled were Chris and Carolyn McAuliffe, both in their 60s, who have postponed retirement because of ongoing loan repayments. The couple originally borrowed $114,000, but compound interest has ballooned the remaining balance to roughly $500,000.

Chris, an engineer at a health insurance company, told the Journal he regrets going to college. His monthly payment is set to rise to $3,000 starting this month — nearly three times what he paid before the COVID-19 pandemic.

According to the Education Data Initiative, a US education statistics research organization, the average federal student loan balance for baby boomers — those between 62 and 80 years old — stands at $42,780.

Loan repayments that stretch into retirement place a significant strain on fixed incomes. The Social Security Administration reported that as of January, the average monthly Social Security benefit for retired workers was $2,071. Applying the average monthly student loan payment of $390, retirees would need to spend roughly 19 percent of that benefit on debt repayment.

Years of high interest rates and compound interest structures have deepened the burden for long-term borrowers. In many cases, even after paying down a substantial portion of the principal, accumulated interest has pushed the outstanding balance higher than the original loan amount — leading experts to warn that student debt has hardened into long-term structural debt rather than a simple education expense.

Parents who took on their children's tuition costs face a similarly grim picture. Robert Lee, 71, borrowed $66,000 ($101,000) twenty-nine years ago to pay for his child's education and still owes $51,000, the Journal reported. Parent PLUS Loans — federal loans designed for parents to cover their children's college costs — are cited as a major driver of rising debt among older Americans.

A complex repayment system is making matters worse. Federal student loan repayment options and forgiveness programs have been overhauled multiple times, leaving older borrowers struggling to understand or use the options available to them. The Education Data Initiative found that the Public Service Loan Forgiveness program carries an extremely high rejection rate — 93 percent of applications last year were denied.

The repayment burden is likely to grow. Starting this month, the SAVE Plan — an income-driven repayment program introduced by the Biden administration — will be discontinued, forcing more than 7 million borrowers to switch to a different repayment option, the Guardian reported. The change has fueled concerns about rising monthly payments and a shrinking menu of available programs.

The broader financial picture for American retirees is also precarious. A survey released in January by real estate information platform Clever Real Estate found that US retirees said they need an average of $823,800 for a financially stable retirement, but their actual average savings stood at just $288,700.

Student loan debt has evolved from a generational problem for the young into a structural risk that destabilizes retirement and long-term financial security, the Journal concluded. Compound interest and extended repayment terms are leaving a growing number of older Americans unable to escape debt even after repaying far more than they originally borrowed.

Experts say student debt has grown into a socioeconomic challenge that reaches beyond individual education investment decisions, affecting labor market participation, consumer spending and the timing of retirement. Should the number of older borrowers continue to rise alongside longer repayment periods, the trend could place new strains on the United States' pension and welfare systems.