Elderly student loan borrowers owe $121 billion. They ask Biden for relief.

Author of the article:

Washington Post

Danielle Douglas-Gabriel, The Washington Post

Published Dec 27, 2024  •  6 minute read

Senior citizens, all members of the Debt Collective, rally outside of the Department of Education on Dec. 11, 2024 in Washington, calling on the Biden administration to cancel student debt for older Americans before the end of his term. (Valerie Plesch/AP Content Services for Debt Collective c/o Sustainable Markets)

They don’t fit the typical profile of activists at a rally for student debt forgiveness. But on a dreary December afternoon, a group of senior citizens stood in the rain outside the Education Department pleading for relief from a debt that many fear will burden them for the rest of their lives.

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Some sat in rocking chairs, cross-stitching their debt number in a pattern. Others held signs that read, “Time is running out, sunset our debt.” Or wore T-shirts saying, “Debt relief before we die.”

“We’re going to keep the pressure on, but we know our days are numbered,” Valerie Warner, 71, who owes $268,000 in student loans, said while holding her cross-stitch. “I don’t think the new administration is going to do anything to help, so we need action now.”

In the waning days of the Biden administration, activists are urging the Education Department to discharge the student debt of older borrowers who they say are in no position to repay. They say the department could use a little-known federal statute that considers a person’s ability to pay within a reasonable time and the inability of the government to collect the debt in full.

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There are 2.8 million federal student loan borrowers aged 62 and older with a total of $121.5 billion in debt, more than 726,300 of them over the age of 71, according to the Education Department. Older borrowers are one of the fastest-growing segments of the government’s student loan portfolio, and their Social Security benefits are subject to garnishment.

Activists are making an impassioned plea to an administration that has fought to ease the burden of student debt, even as those efforts have been thwarted in court by conservatives. President-elect Donald Trump has been hostile toward President Joe Biden’s student loan forgiveness policies, leading activists to believe their best chance to secure relief lies with Biden.

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The White House did not immediately respond to requests for comment. The Education Department would only acknowledge receiving a memo from the Debt Collective, the group organizing the campaign, outlining the agency’s authority to cancel the debt of older borrowers.

The activist organization said it has been meeting with members of Congress, White House committees and Education Department officials about the matter since September.

“Many of these folks have been borrowers for 20 or 30 years, with punishingly high interest rates. Their balances and the way they have dragged on for decades is just an indictment of the broken system and the failure of past relief efforts,” said Eleni Schirmer, an organizer with the Debt Collective.

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In Warner’s case, her debt dates back to the 1980s when she first borrowed to complete a law degree at the age of 30. Despite passing the bar and excelling in her classes, Warner said she was passed over by law firms. She landed a job at legal aid – rewarding work but not the kind that paid much money, she said. Still, her debt was manageable.

Senior citizens, all members of the Debt Collective, rally outside of the Department of Education on Dec. 11, 2024 in Washington, calling on the Biden administration to cancel student debt for older Americans before the end of his term. (Valerie Plesch/AP Content Services for Debt Collective c/o Sustainable Markets)

Years went by, and Warner began working for DC public schools – another rewarding job but one that didn’t pay enough to wipe out her loans. While there, she enrolled in a master’s of education program at the University of Maryland Global Campus and took online classes at night. She graduated in 2012, despite being laid off while completing the degree.

All told, Warner borrowed a total of about $60,000 for her two advanced degrees. The amount seemed reasonable given the career trajectory that both credentials promised, but that path never materialized. Working a series of low-wage jobs, she went in and out of forbearance before ultimately defaulting. The balance ballooned to the current $268,000 total over the years due to collection fees and interest capitalization.

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“None of the payments that I’ve made or the tax refunds that they’ve seized ever made a dent in what I owe,” said Warner, a Virginia resident, adding that she postponed her third gallbladder procedure to attend the rally. “I’ve never made a lot of money in my life, and at this point, I’m living off of $1,000 a month in Social Security. Every time I turn around, they’re asking me to pay $1,800 a month on my student loans, and that’s about $800 more than I have. How am I supposed to live?”

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According to the think tank New America, the number of Americans approaching retirement age with student loan debt has skyrocketed over 500 percent in the last two decades. Some have loans they took out to finance their college educations, while others took out federal Parent Plus loans or co-signed private loans for their children.

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The $230,000 in student loan debt Becki Wells, 63, owes is from putting both her children through college. Although her son and daughter took out loans of their own to attend Howard University and Temple University, respectively, they still needed additional financial support to graduate. Wells said she and her husband had been saving for college since the birth of their children but lost it all when the market crashed in 2009. There wasn’t enough time to rebuild their savings before their kids headed off to college.

“I was in a vulnerable position,” Wells said, as the rally wrapped up. “It’s not that I don’t take responsibility … but I do need a hand. Educating my children was an investment in this country. They’re taxpayers. They’re productive.”

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Wells said she has never missed a student loan payment since she began making them in 2015. To keep her monthly payments manageable, she withdrew money from her retirement account to lower the balance of her education debt. Still, Wells sees no viable path to paying off what she owes.

Schirmer at the Debt Collective said older borrowers are in the worst position to pay off their loans and face some of the harshest consequences. The federal government will garnish up to 15 percent of the Social Security income of borrowers in default to recoup student loan debt, even if that means leaving recipients with benefits that fall below the poverty line.

“There’s a cruel irony about it,” Schirmer said. “The way that you pay back student loans is either you take a lot of time and you pay back a little over time or you have a lot of money and you pay it back quickly. These folks do not have 25 years to make a payment plan, nor do they have money to quickly write off their balances.”

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The lack of time and money to repay is the crux of the Debt Collective’s push for group discharges for older borrowers. The activist group drafted a memo arguing the education secretary could forgive loans using the Federal Claims Collection Act, which considers such factors as the ability to pay within a reasonable time and the inability of the government to collect in full in a reasonable time.

Adam Minsky, an attorney who specializes in student debt, said there is merit to the arguments laid out in the memo but suspects the use of the statute for broad debt cancellation would be subject to legal reprisals, just like Biden’s other loan forgiveness policies. The courts have enjoined the Education Department from moving forward with Biden’s signature student loan repayment plan, Saving on a Valuable Education, and his proposed debt relief regulation, commonly known as Plan B.

“There’s merit to the arguments that this falls outside of the existing injunctions,” Minsky said. “That said, as a practical matter, I don’t think that judges and courts that have been hostile to mass debt relief would treat this differently from other programs that have been blocked or struck down.”

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