Millions of older Americans still grapple with student loan debt, hindering retirement

Advice for dealing with your student loans

Graduating with student loan debt is an all too common reality for new college degree holders beginning their careers. But there's another, often overlooked cohort of debtors facing their own set of challenges: Americans over the age of 55 approaching their retirement years. 

About 2.2 million people over the age of 55 have outstanding student loans, according to data from the Federal Reserve Board's 2022 Survey of Consumer Finance. These older workers and unemployed people say the loans they took out years earlier could hinder their ability to retire comfortably, according to a new report from The New School's Schwartz Center for Economic Policy Analysis. 

"This is not a problem that's going away... it's only going to get worse," the report's author, Karthik Manickam, said in a press conference Wednesday to discuss the findings. 

On average, workers age 55 to 64 take nearly 11 years to finish repaying their student loans, while workers 65 and up require 3.5 years, federal data shows.

The report comes as Americans increasingly question the value of a college degree, with a new Pew Research Center survey showing that only about 1 in 4 Americans believe a bachelor's degree is necessary to land a good job.

Of all student loan borrowers over the age of 55, 43% are middle-income, the Schwartz Center researchers found. Half of debtors aged 55 and over who are still working are in the bottom half of income earners, making under $54,600 a year, the report shows.

The latter's relatively small incomes mean they sharply feel the effects of putting a portion of their salary toward paying off student loans, making it hard for them to also save for retirement. 

Some older student debtors also fail to obtain a degree, putting them in a particularly precarious financial position. Not only must they make repayments on the loans, but they must do so without having benefited from what is known as the "sheepskin effect," referring to the advanced earning power a college degree typically confers on job seekers. 

Nearly 5% of workers between 55 and 64, and more than 17% of workers 65 and older, have not completed the degrees for which they had taken out loans, according to the report. These older workers are both in debt and lack enhanced earning power.

"The benefits only typically hold for those who have completed their degrees," Manickam said.

Policy interventions like debt forgiveness, making debt repayment easier, or preventing the garnishing of Social Security benefits to repay student loans, can mitigate these impacts, the report's authors argue. 

Megan Cerullo

Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.