When Michele Fitzgerald and her daughter, Jenni, go out for dinner,
Jenni pays. When they get haircuts, Jenni pays. When they buy groceries,
Jenni pays
It has been six years since Ms. Fitzgerald — broke, unemployed and in
default on the $18,000 in loans she took out for Jenni’s college
education — became a boomerang mom, moving into her daughter’s townhouse
apartment in Hingham, Mass.
Jenni pays the rent.
For Jenni, 35, the student loans
and the education they bought have worked out: she has a good job in
public relations and is paying down the loans in her name. But for her
mother, 60, the parental debt has been disastrous.
“It’s not easy,” Ms. Fitzgerald said. “Jenni feels the guilt and I feel the burden.”
There are record numbers of student borrowers in financial distress,
according to federal data. But millions of parents who have taken out
loans to pay for their children’s college education make up a less
visible generation in debt. For the most part, these parents did well
enough through midlife to take on sizable loans, but some have since
fallen on tough times because of the recession, health problems, job
loss or lives that took a sudden hard turn.
And unlike the angry students who have recently taken to the streets to
protest their indebtedness, most of these parents are too ashamed to
draw attention to themselves.
“You don’t want your children, much less your neighbors and friends,
knowing that even though you’re living in a nice house, and you’ve been
able to hold onto your job, your retirement money’s gone, you can’t pay
your debts,” said a woman in Connecticut who took out $57,000 in federal
loans. Between tough times at work and a divorce, she is now teetering
on default.
In the first three months of this year, the number of borrowers of
student loans age 60 and older was 2.2 million, a figure that has
tripled since 2005. That makes them the fastest-growing age group for
college debt. All told, those borrowers owed $43 billion, up from $8
billion seven years ago, according to the Federal Reserve Bank of New
York.
Almost 10 percent of the borrowers over 60 were at least 90 days
delinquent on their payments during the first quarter of 2012, compared
with 6 percent in 2005. And more and more of those with unpaid federal
student debt are losing a portion of their Social Security
benefits to the government — nearly 119,000 through September, compared
with 60,000 for all of 2007 and 23,996 in 2001, according to the
Treasury Department’s Financial Management Service.
The federal government does not track how many of these older borrowers
were taking out loans for their own education rather than for that of
their children. But financial analysts say that loans for children are
the likely source of almost all the debt. Even adjusted for inflation,
so-called Parent PLUS loans — one piece of the pie for parents of all
ages — have more than doubled to $10.4 billion since 2000. Colleges
often encourage parents to get Parent PLUS loans, to make it possible
for their children to enroll. But many borrow more than they can afford
to pay back — and discover, too late, that the flexibility of
income-based repayment is available only to student borrowers.
Many families with good credit turn to private student loans, with
parents co-signing for their children. But those private loans also
offer little flexibility in repayment.
The consequences of such debt can be dire because borrowers over 60 have
less time — and fewer opportunities — than younger borrowers to get
their financial lives back on track. Some, like Ms. Fitzgerald, are
forced to move in with their children. Others face an unexpectedly
pinched retirement. Still others have gone into bankruptcy, after using
all their assets to try to pay the student debt, which is difficult to
discharge under any circumstances.
The anguish over college debt has put a severe strain on many family
relationships. Parents and students alike say parental debt can be the
uncomfortable, unmentionable elephant in the room. Many parents feel
they have not fulfilled a basic obligation, while others quietly resent
that their children’s education has landed the family in such difficult
territory.
Soon after borrowing the money for Jenni’s education, Ms. Fitzgerald
divorced and lost her corporate job. She worked part-time jobs and
subsisted on food stamps and public assistance.
Source : nytimes.com