Last week, the Consumer Financial Protection Bureau issued a report showing that the number of borrowers age 60 or older with student loan debt has quadrupled in the last 10 years.
Other data show that borrowers over age 30 owe more than half of all student loan debt and that this number has continued to grow. The bottom line is that despite how we tend to talk about student debt, the assumption that this issue is one for the younger generation is no longer the reality.
One reason is the increase in enrollment of nontraditional students. A traditional student is an individual who becomes a full-time college student right after high school graduation.
A nontraditional student is just about everyone else. They are older students going back to finish a degree ; laid-off workers who want additional credentials to improve their job prospects; or 30-something office workers who realize they’ve always wanted to be a teacher or who need higher degree to move up in their chosen career path.
[Consider these FAFSA tips to help nontraditional students pay for college. ]
More recently, older students enrolled in college because of the economic downturn in 2008. A ccording to the National Center for Education Statistics, in 2007, 1.9 million students between the ages of 40 and 64 were enrolled in college. In 2011, that number had increased to 2.3 million and is now decreasing as the economy recovers.
The big difference between traditional and nontraditional students is time. Nontraditional students often have to juggle families and full-time jobs along with their studies. As such, they tend to enroll part time.
Recent statistics show that the reten tion rate for students attending college full time is significantly greater that of those only attending part time, and those who don’t complete their education are three times as likely to default on their student loans.
Because of that, older borrowers need to be even more careful when making decisions about college debt. Here are some specific traps that nontraditional students need to avoid.
[Consider your student loans before dropping out of college.]
— Not completing: Students who don’t complete their degree are far more likely to default on their student loans. Defaulting leads to ruined credit and possible wage and tax refund garnishment, in addition to these borrowers having no degree or the benefits of a degree.
Before starting a postsecondary program, think about the long term and ensure you have safeguards and commitments in place to help ensure your success. If you’re not sure about the program, do everything possible to attend without taking out loans , even if that means taking longer to complete your credential.
Consider that more employers are offering tuition and student loan reimbursement benefits to employees. Restricting your costs to th e amount your employer will reimburse is a good way to ensure that no matter what happens, you won’t be left with debt and no degree.
[Find out why student loan repayment may be the newest employee benefit.]
— Becoming too dependent on student loans: Many nontraditional students return to school to improve their financial situation in the long term, but even those who complete their credential can find that the amount of debt they took on may not have been worth it.
Due to their age and existing income, many nontraditional students do not qualify for the grant and scholarship aid that traditional students tend to receive. This means a greater dependence on both federal and private loans to pay the cost of tuition and other expenses.
Since financial aid can be used to help pay for room and board, some nontraditional students and their families find themselves inadvertently becoming dependent on the financial aid to pay their regular household bills. These students can end up taking on more debt than they can comfortably afford to repay, especially with the postgraduation loss of the aid that was being used to help pay household bills.
— Forgetting to balance debt with retirement: While all students may receive the same benefits from a postsecondary credential and take on similar debt levels, there’s a big difference in how that debt can affect traditional and nontraditional students in the long term.
Making student loan payments for 10 years or more when you’re a 20-year-old recent graduate is very different from doing so when you’re 45 years old and hoping to retire in 20 years.
When making the college debt decision, be sure to budget your anticipated debt far into the future and include your retirement goals. To be on the conservative side, consider budgeting for these debt payments based on the assumption that your salary does not increase as a result of your college experience. Your student loans will be due and payable regardless of whether your salary increases or you find a job in your field down the line.
Although going back to school can be much harder as an older adult, the benefits — including your income — can still be worthwhile. According to the U.S. Census Bureau, the average salary for those with a high school diploma but no college is about $35,000, while the average salary for those with a bachelor’s degree is just under $60,000. The unemployment rate for those with a college degree is half of that of those without.
Both are great reasons to return to school if you are considering it. As with any large financial investment, ensure you fully understand the long-term implications of taking on student loan debt.
More from U.S. News
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3 Financial Aid Traps for Nontraditional Students to Avoid originally appeared on usnews.com
