Student debt is no longer just a young persons’ issue. As of December 2018, approximately 8.4 million Americans aged 50 and older owe $289.5 billion in student loans, approximately 20% of total student loan debt. This represents a 512% increase from the $47.3 billion owed by that cohort in 2004, making the growth of student loan debt among older borrowers the greatest among any age group.
A 2017 analysis by the Consumer Financial Protection Bureau reveals that from 2012 to 2017, total student loan debt for borrowers aged 60 and above increased by 72% in New Jersey, 107% in Pennsylvania, and 146% in Delaware. Many of the growing number of older borrowers face challenges that make them more reliant on their loan servicers for assistance and more vulnerable to misrepresentations by those servicers.
The data also shows that record numbers of older student loan borrowers are struggling with repayment. Delinquency rates for student loan borrowers over 60 has jumped by 80-106% in the Northeast United States. Typically, student loans are often a bigger problem here in the Southeast, so I would guess Florida’s delinquency rate has increased at least 100% from five years ago. AARP reports that federal student loan borrower defaults increase with age. In 2015, approximately 29% of federal student loan borrowers between 50 and 64 were in default; for borrowers aged 65 and above, the default rate rate rose to 37% The default rates for those below 50 is 17% – still high unfortunately.
So it’s not just a millennial problem. This student loan crisis impacts all generations.
I congratulate the Bankruptcy Court for the Middle District of Florida, in its efforts to understand the problem and do something about it. For those in Tampa, Orlando, Jacksonville, Gainesville and Ocala, as well as all areas in between, a new student loan portal will be going online in the Middle District on October 1. Other courts in Southern and Northern Florida, as well as other States may follow soon. Arizona will likely be next as that Court has participated in the Student Loan Portal Committee’s presentation and seminars on this topic.
So what this new portal all about?
In an effort to ensure debtors receive a “fresh start” and not a “false start”, our Bankruptcy Court has implemented a Student Loan Program which utilizes a transparent portal to obtain relief from federal and private student loans. Rather than simply leaving these loans on hold to accrue capitalizing interest in a Chapter 13, the SLP is designed to enhance communication and availability of available options and end needless forbearance which causes larger loan balances. For instance, a Debtor who owes $100,000.00 in student loans with an interest rate of 8% ends up owing over $148,000.00 after a five-year plan if the loan is simply put on hold. The Portal is also designed to accommodate settlements of private student loans via a mediation. The automatic stay will be lifted as to matters addressed via the portal.