Student loan debt harms retirement, says AARP

AARP is wading into the fight over student loans, taking up the cause in some state capitals to more tightly regulate abusive student loan collection practices.

Among its actions: battling the federal government over Social Security garnishment to collect on defaulted loans by older borrowers, and pursuing greater transparency in fees and tuition.

Related: 10 states with the highest average student loan debt

AARP? Really? Yes, says a Politico report, which points to the Consumer Financial Protection Bureau data saying that Americans over 60 are the fastest-growing category of student loan borrowers and that they have “roughly quadrupled in number between 2005 and 2015.”

And that poses a threat to retirement, since “[a]lthough older borrowers still account for just a sliver of the more than $1.5 trillion in total outstanding student loan debt, they’re more likely than younger borrowers to be behind on payments,” says the report.

Not all of it is their debt, of course; most of them are actually paying off loans they took out for their kids or grandkids. But the result is the same: They’re stuck on the business end of loans that can take 20–30 years to repay.

Related: Student loan debt benefits more popular with workers than employers

The report quotes Lori Trawinski, director of banking and finance at the AARP Public Policy Institute, saying, “We consider it a looming threat,” adding, “The idea that you could have student loan debt of your own that lasts 20 or 30 years, and then pick up some for your child that could last another 20 or 30 years—you’re looking at a lifetime of carrying student loan debt in some form. Depending on one’s income level, that that can really hamper the ability to have financial security” in retirement.”

Although mortgages and credit card debt still amount to more, in dollars and cents, than student loans for retirees, that may not be the case forever. Student debt is growing so fast that a CFPB analysis of New York Federal Reserve data finds that the number of American borrowers over age 60 has ballooned from 2005’s 700,000 to 2.8 million in 2015.

And lenders don’t hesitate to garnish Social Security checks to get back payments for student loans—something that AARP opposes. Student loans are tougher to discharge for borrowers in trouble than other types of debt, and the feds let the Education Department raid “safety-net benefits to recoup defaulted federal student loans”—something it’s been doing more and more as greater numbers of older borrowers get caught short.

In fact, says the report, Government Accountability Office figures indicate that in the 2015 fiscal year “the government garnished the Social Security benefits of almost 114,000 student loan borrowers over 50 years old, reducing their benefits, on average, by more than $140 per month.” That makes it tough to get by, especially if Social Security provides a major portion of retirement income.

AARP isn’t the only group to oppose garnishment; the National Committee to Preserve Social Security & Medicare, which is a nonprofit advocacy group lobbying to protect seniors’ benefits, is on the same side of the fight.

The report points to Dan Adcock, the organization’s director of government relations and policy, characterizing student loan debt as one more weight added to workers’ efforts to get through an overall retirement crisis that already challenges them with “stagnant wages and employers who no longer offer retirement benefits.” Adcock is quoted saying, “On top of that you have student loan debt, and that’s going to make your situation even worse in terms of saving for retirement.”

While some Democrats have introduced legislation to prevent garnishment of Social Security for student loans, and have called for more federal money for public colleges and universities so that institutions can eliminate tuition for some students, as well as lowering interest rates on existing student loan debt, some conservative lawmakers have blamed the availability of federal money for driving up college costs.

AARP’s efforts at the state level to tighten regulations on those relentless student loan servicers, by the way, have previously encountered roadblocks from industry groups; now, the Trump administration has entered the fray—on the side of the servicers.

And with the Trump administration’s rollback of protections for student loan borrowers, as well as killing rules on for-profit schools, it doesn’t look as if congressional action will take place any time soon.

But politicians might want to remember one last thing that the report points out: “far more than college students and 20-somethings, older Americans really do show up and vote.”