Student debt relief? Yes! But pension cuts, housing and health care costs are sending retirees into record debt and bankruptcy.

U.S. student loan debt, spread out across 44.7 million borrowers, now exceeds the $1.59 trillion mark. 

Facing political pressure from the Left, President Biden has increased his proposal for student debt relief from $10,000 to $50,000.

Student debt has become a national crisis and deserves the attention it is getting.

But perhaps lost in the discussion of the impact of the economic crisis hitting most of us except the ultra-rich is the increased debt and bankruptcy among older folks.

The share of American families with households head by those ages 55 or older with debt increased continuously from 1998 through 2019.

Even preceding the pandemic.

This increase in the incidence of debt has been driven by those 75 or older.

Mortgage debt continued to drive the level of debt payments in 2019.

But families with heads ages 75 or older had significant growth in both median housing and median credit card debt in 2019. 

Families with African American or Hispanic heads had much higher debt-to-asset ratios than families with white, non-Hispanic heads.

Further, the debt of the families with minority heads is more likely the result of consumer debt, not housing debt. This is troubling because while families can build wealth through homeownership, they cannot through consumer debt. 

Furthermore, families with minority heads, particularly those with Hispanic heads, were more likely to have debt payments more than 40 percent of their income.

In a 2018 report, Graying of U.S. Bankruptcy: Fallout from Liife in a Risk Society, Deborah Thorne, Pamela Foohey, Robert Lawless and Katherine Porter write,

The risks associated with aging, reduced income, and increased healthcare costs, have been off-loaded onto older individuals. At the same time, older Americans are increasingly likely to file consumer bankruptcy, and their representation among those in bankruptcy has never been higher. Using data from the Consumer Bankruptcy Project, we find more than a two-fold increase in the rate at which older Americans (age 65 and over) file for bankruptcy and an almost five-fold increase in the percentage of older persons in the U.S. bankruptcy system. The magnitude of growth in older Americans in bankruptcy is so large that the broader trend of an aging U.S. population can explain only a small portion of the effect. In our data, older Americans report they are struggling with increased financial risks, namely inadequate income and unmanageable costs of healthcare, as they try to deal with reductions to their social safety net.

Unmanageable debt has become the common concern of both the young and the old.

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