The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens.
New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.
The fact that even seniors remain saddled with student loans highlights what a growing chorus of lawmakers, economists and financial experts say has become a central conflict in the nation's higher education system: The long-touted benefits of a college degree are being diluted by rising tuition rates and the longevity of debt.
Some of these older Americans are still grappling with their first wave of student loans, while others took on new debt when they returned to school later in life in hopes of becoming more competitive in the labor force. Many have co-signed for loans with their children or grandchildren to help them afford ballooning tuition.
The recent recession exacerbated this problem, making it harder for older Americans — or the younger people they are supporting in school — to get good-paying jobs. And unlike other debts, student loans cannot be shed in bankruptcy. As a result, some older Americans have found that a college degree has led not to a prosperous career but instead to a lifetime under the shadow of debt.
"A student loan can be a debt that's kind of like a ball and chain that you can drag to the grave," said William Brewer, president of the National Association of Consumer Bankruptcy Attorneys. "You can unhook it when they lay you in the coffin."
Floridians owe about $46.5 billion in student debt. But the Federal Reserve does not break the state data down by age, so it's not clear how much of the $46.5 billion is owed by Floridians 60 years old and older.
Sandy Barnett, 58, of Illinois thought she was doing the right thing when she decided to pursue a master's degree in clinical psychology in the late 1980s. She had worked her way through college but said she took out a loan of about $21,000 to pay for graduate school so that she would have more time to focus on her studies.
But even after earning her master's, Barnett struggled to find a job that paid more than $25,000 a year and soon fell behind on her payments. She suffered through a layoff, a stretch of unemployment and the death of her husband while her student loan debt ballooned to roughly $54,000.
Barnett filed for bankruptcy in 2005, but she couldn't get out from under her student loan debt. She said a collection agency began garnishing the wages from her full-time job as a customer service representative a year ago.
"I shake my head every day at the thought that I'm working for nothing," Barnett said. "It's really a black hole because there's no end in sight."
At a Senate subcommittee hearing last week, Treasury Secretary Timothy Geithner said the cost of higher learning should reflect the quality of education received. Many students "haven't been able to earn a return that justifies the expense," he said.
Over the past decade, the cost of college has risen between 2 and 6 percent per year, depending on the type of institution, according to the College Board.
Meanwhile, the New York Fed estimates that Americans owed $870 billion in student loans during the third quarter of last year, significantly outpacing credit card debt or auto loans. Borrowers age 60 and older accounted for 5 percent of that debt. The share for Americans age 50 and older was 17 percent.
In some cases, student debt has been a burden for even financially responsible seniors.
Maxine Bass, 60, of Minnesota said her granddaughter had dreamed of going to college, but her mother couldn't afford it. Bass had good credit and a steady job.
So when her granddaughter was accepted into St. Catherine University, Bass said she gladly co-signed for a $38,000 loan. But when the granddaughter fell behind on the payments as she hunted for a job with a decent salary, Bass' own finances took a hit.
"I went into a panic, like, what was I going to do?" Bass said.
Because of late fees and missed payments, Bass said she and her granddaughter owe about $69,000.
"Many parents who thought they were headed to retirement with a college-educated child end up continuing to work because of student debt that can't be paid," Sen. Richard Durbin, D-Ill., said at last week's hearing.
Durbin has introduced legislation that would allow private student loan debt to be discharged in bankruptcy, though borrowers would still have to pay off any federal loans. Sallie Mae, one of the nation's largest private student lenders, as well as consumer groups, support all types of student loans being forgiven during bankruptcy. Last year, President Barack Obama addressed the issue by easing the repayment requirements for federal student loans. The new rules allow borrowers to pay 10 percent of their income for 20 years before the loan is forgiven.