|
 |
The Texas Tribune
At 69, she's still paying off $12,000 of student debt
It isn't just a millennial problem.
By Shannon Najmabadi
Oct. 23, 2019
About 222,140 Texans ages 60 and older had student loan debt in 2017,
carrying a median load of $15,754, according to government data… Lynda
Sue Costley, 69, got a drafting degree from Amarillo College decades
ago and returned to take classes in design software. She is in default
on student loans she took out from the federal government. Eddie
Gaspar/The Texas Tribune
AMARILLO — If 69-year-old Lynda Sue Costley wants to shower, she has to
go to a friend’s house. Her trailer, on a gravelly road outside
Amarillo, hasn’t had running water since 2014 — when her husband died
from cancer. She spent the little savings she had on his medical care,
she said, and hasn’t repaired the burst pipe.
Costley works part time at a food bank, making $7.25 an hour, and said
she stretches every dollar she has. But every month, she receives a
letter in the mail saying the federal government is withholding $134
from her Social Security checks — the equivalent of 18 hours of work.
Like death and taxes, Costley may be facing another certainty in life: her student loans.
Although she attended college decades ago and made payments when she
could, Costley’s debt has gone into default, swollen with accrued
interest and been turned over to a collection company. She’s had her
wages garnished and her income tax refunds withheld. Nearing 70, she
still owes nearly $12,000 for classes she attended in the 1980s and
1990s — and her balance continues to be padded by interest and the debt
collector’s costs.
“I know I’ve got to pay it back; it needs to be paid back,” said Costley. “When I have the money, I will.”
She’s not alone.
Typically associated with millennials, the specter of student loan debt
hangs over potentially thousands of retirement-age Texans, like
Costley. Older Americans — ages 65 and over — were the fastest-growing
demographic of student loan holders, according to a government report
from 2016, and the most likely to be in default.
Some returned to school midway through their careers. Others took out loans for their children.
Although the increasing cost of college has led Americans to carry more
student debt than before, older borrowers may have been particularly
affected by changes to loan terms. Unlike students, parents face no
lifetime limit on how much they can take out in federal loans, and
private lenders, like banks, have increasingly required that a
student’s loans be co-signed by someone with good credit. The result:
Older adults are not just paying off loans for themselves, but may be
drowning under debt they’re carrying for their children.
More flexible repayment options, like income-based plans, also were not
available to federal student loan holders before the 1990s. Costley
falls into that category.
She got a drafting degree from Amarillo College in the 1980s and
returned a decade later to learn AutoCAD, a design software for
architects. She dropped out.
Costley didn’t enter the field she studied — she blamed an oil slump
for a lack of jobs — but she’s worked virtually all her adult life, at
Walmart and Office Depot, at food establishments and hotels. She
married and divorced twice before meeting Jerry, a farmer 12 years her
senior, and still lives in the white trailer they shared. Money was
always tight, but “we had each other,” she says now. “It was enough.”
It wasn’t until he died that the letters started coming, Costley said.
First it was notice that her federal tax refund would be used to pay
down her student loan debt. Then it was letters saying $134 had been
withheld from her monthly Social Security payment, leaving her with
about $760.
She’s not the only one in this situation: 173,000 people in the United
States had part of their Social Security retirement, survivor or
disability benefits withheld in 2015 — 38,249 of them 65 and older,
according to a report authored by the nonpartisan Government
Accountability Office. For many, the withholdings went to paying off
interest or fees and not to reducing the principal of the loans.
Records show Costley paid at least $1,600 in interest and more than
$550 in government fees between April 2017 and September 2019. About
30% of the amount withheld from her Social Security checks or wages
during that time went to interest and 10% to fees. A recent statement
Costley received from her debt collector shows she owed $1,817 in
collection costs and $40 in interest as of late September, and the
amounts continually build.
Lynda Sue Costley still owes nearly $12,000 for classes she attended in
the 1980s and 1990s. Ralph Duke for The Texas Tribune
An Education Department spokesperson said a 1996 debt collection act
requires the agency to refer defaulted student loans for "offset," the
practice of diverting Social Security payments or tax refunds to repay
government debts. The department will first give borrowers a 65-day
warning and tell them they can avoid offset by entering into a
"reasonable and affordable" repayment plan or proving that their debt
is unenforceable.
Costley’s debt collection company did not respond to requests for comment.
Compelled collection
Borrowers may be beckoned by the prospect of economic advancement. But
student loans can have a devastating effect on those who default —
destroying their credit or landing them in the crosshairs of a debt
collector or in court. It can even threaten their housing.
Joanna Darcus, an attorney for the National Consumer Law Center, said
homeowners subject to Social Security offsets may be unable to modify
their mortgages — a process that can forestall eviction or foreclosure
— due to the loss of income. She said she’s also seen bad credit from
student loans hurt borrowers’ prospects for getting affordable or
subsidized senior housing.
|
|
|
|
