1 Student Debt is an Economic Concern for Borrowers of All Ages In response to a question in ASA’s Life Delayed survey, we found: Has your student loan debt negatively affected/impacted your ability to do any of the following? 55% say it has impaired their ability to buy a home 60% say it has impacted their ability to take a vacation 52% say it has limited their ability to buy a car 35% say it has even limited their ability to purchase daily necessities 62% say they have delayed saving for retirement because of their student loans
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In response to a question in ASA’s Life Delayed survey, we ...€¦ · 08.05.2017 · In response to a question in ASA’s Life Delayed survey, we found: Has your student loan
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Student Debt is an Economic Concern for Borrowers of All Ages
In response to a question in ASA’s Life Delayed survey, we found:Has your student loan debt negatively affected/impacted your ability to do any of the following?
55% say it has impaired their ability to buy a home
60% say it has impacted their ability to take a vacation
52% say it has limited their ability to buy a car
35% say it has even limited their ability to purchase daily necessities
62% say they have delayed saving for retirement because of their student loans
• Older borrowers are increasingly burdened by student debt, leading to long-term economic concerns
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Student Debt is an Economic Concern for Borrowers of All Ages
29%
62%
119%
385%
111%
187%
323%
977%
0% 200% 400% 600% 800% 1000% 1200%
Less than 25 years old
Age 25-49
Age 50-64
Age 65 and over
Percentage increase 2005-2015Source: GAO
Debt balance Number of Borrowers
Quick Statistics on Seniors with Debt
• 867,000 households are headed by someone 65 or older who carries student loan debt
• Over 173,000 Social Security recipients, including those receiving retirement, survivor or disability benefits, had their Social Security garnished in 2015 due to student loan debt.
• Of this group, 32,400 were over the age of 65, a 540% increase from the level of 6,000 in 2002
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Reasons for Growing Student Debt Among Older Americans
1. Increasing college costs have lead to greater borrowing• Today, 66% of all students in MA attending a public or nonprofit college borrow student
loans with the average debt amount for an undergraduate now reaching $31,466 upon graduation
Source: The College Board, Annual Survey of Colleges; NCES, IPEDS data. 4
College Tuition and Fees Increase over 40 YearsPrivate Nonprofit Four-Year Public Four-Year Public Two-Year
2. Federal loan repayment plans have extended repayment timeframes• According to the Brown Center for Education Policy, over an 18 year period, the average
time it takes to pay back a federal loan has nearly doubled.• However, other estimates say that the average repayment time is significantly longer
• Mark Kantrowitz estimates the average time is 16-18 years• A survey from One Wisconsin Institute puts the average time to pay back a
bachelor’s degree at 19.7
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Year of Loan Origination Average Time to Pay Off
1992 7.5
1995 8.8
1998 10.5
2001 9.9
2004 13.7
2007 14.1
2010 13.4
Source: Brown Center for Education Policy at Brookings
Reasons for Growing Student Debt Among Older Americans
3. A shift in age demographics of college students• In 2014, 40% of students entering a degree granting post secondary institution were over
25 years old. (National Center for Education Statistics). This is up from 27% in 1970. • The average age for a community college student is now 29 years old
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27%
40%
0
2000
4000
6000
8000
10000
12000
14000
1970 1980 1990 2000 2007 2014
Num
ber o
f stu
dent
s (in
thou
sand
s)
Number of Students Enrolling At Age 25 or Older
Reasons for Growing Student Debt Among Older Americans
4. Parent loans• 3.3 million parents are repaying over $75 billion in outstanding Parent PLUS loans• National Center for Education Statistics reports that 20% of parents took out Parent PLUS
loans for their child’s education in 2011-12, up from 12% in 1999-2000, and just 4% in 1989-90.
Source: GAO analysis of data from the National Student Loan Data System, Department of Education. | GAO-17-45
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Parent Plus Borrowers Less than 50 years 810,144 771,214 745,804 762,334 817,605 902,752 992,632 985,722 937,795 905,399 915,960Parent Plus Borrowers age 50 to 64 1,077,817 1,059,602 1,085,746 1,177,766 1,316,362 1,484,615 1,656,568 1,764,217 1,841,956 1,917,582 1,975,287Parent Plus Borrowers age 65 and older 65,394 66,819 70,862 79,304 88,905 101,504 117,616 141,064 162,456 186,142 210,256
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Number of Plus Loan Borrowers by Age
Reasons for Growing Student Debt Among Older Americans
• Financial education and targeted advice can help• Only 1/3 of respondents in ASA’s survey said they fully understood the amount
of debt they were taking on when they first took out student loans
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What Can Be Done?
…Say they did not understand at all
…Report they fully understood the debt they were taking on when they took out their loans
20%...
38%...
9
22% 19% 17%
34% 38% 35%44% 43% 48%
0%10%20%30%40%50%60%
Budgeting Loan repayment Best practices for future
financial health
Formal Informal No Education
Few have had formal education that would help prepare them to best manage debt
“Please select the answer option that best describes your education, either formal or informal, on the following financial topics”:
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A majority feel unprepared to manage the financial obligation
“Prior to graduating college, do you feel that you were properly prepared to manage the financial obligations when your student loans came due.”
Yes, 39%
No, 53%
Unsure, 8%
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They want financial education, even after graduation
15%
15%
13%
19%
35%
3%
Senior YearJunior YearSophomore YearFreshman YearAt any pointOther (please specify)
At what point during your time as an undergraduate would this type of financial education/loan repayment counsel have been most valuable?
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75%
77%
79%
79%
80%
82%
83%
Counseling on how loan debt may impact my career choices
Counseling on how loan debt may impact my future life choices
General training on how to maintain a budget
Training how to incorporate loan repayment as part of my post-graduation living expenses
Strategies on how to get the education at the most reasonable cost
Different repayment options potentially available
Options on how to reduce student loan debt, e.g., scholarships or grants
They want financial education, even after graduation
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They want financial education, even after graduation
Once out of school, how valuable would/will be the following types of information/resources?
81%
82%
84%
10% 20% 30% 40% 50% 60% 70% 80% 90%
General training on how to maintain a budget
Training how to incorporate loan repayment as part of my post-…
Different repayment options potentially available for me
Engaging Students With Financial EducationTitle 14
What We’ve Learned…
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1. Prioritize/require financial education2. Seek support/endorsement from trusted
individual 3. Personalize program4. Provide timely and relevant content
Financial Education Needs to be a Priority or Requirement
Presentation Title 16
Prioritize/Require Financial Education
Presentation Title 17
Boys and Girls Club of Dorchester
• Financial literacy and higher education planning program for summer interns
• Courses on budgeting, money management, financial fundamentals and education planning
Forman S. Acton Educational Foundation
New Scholars Returning Scholars
• Complete courses on budgeting, credit debt management and student loans
• Participate in online training sessions and discussions
• Attend one-on-one counseling sessions
• Participate in online training sessions and discussions
• Attend one-on-one counseling sessions
• Build financial plan
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Prioritize/Require Financial Education
Presentation Title 19
• Integrated budgeting, credit/debt management and student loan repayment topics into three core courses:– First Year Experience– Foundations of Quantitative Reasoning– Senior Seminar
• Support from VP of Academic Affairs
Dean College
Prioritize/Require Financial Education
Support From Trusted Individual is Key
Presentation Title 20
Support/Endorsement
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Professors; Senior
Administration
Director of Scholarships;
Senior Leadership
Vice President of Programming;
Club Staff
Program Needs To Be Personalized
Presentation Title 22
Personalized Programming
Presentation Title 23
Forman Money Management Program
Personalized Programming
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Gates Millennium Scholars Alumni Association
Content Needs to Be Timely and Relevant
Presentation Title 25
Timely, Relevant Content
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Presentation Title 27
Catholic Memorial School
Timely, Relevant Content
Students Are Learning…
Presentation Title 28
Outcomes
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Boys and Girls Club
54% increase in those who understand how to calculate annual savings potential
49% increase in confidence about understanding the financial aid application process
129% increase in those who said they would know what to do if they were a victim of identity theft
54% increase in those who said they understand loan rates, terms and limits
• Budgeting
• Money Management
• Financial Fundamentals
• Educational Planning
Outcomes
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73%Will make attempt to pay off credit card debt more quickly
78%Plan to keep track of personal spending
“…As a person who is not fully in tune with my financial situation [the course] helped put into perspective what I need to focus on.” —Student, Dean College
Dean College
115% increase in those who said they have a sense of what their future earnings need to be to repay student loans
After taking the courses…
Presentation Title 31
“It's great to talk about what's happening in my life with someone who genuinely cares! Talking to [my Salt counselor] about my finances was at first daunting as, let's face it, it can be an intimidating topic for college students. But with time she helped me realize that I'm already raising important questions about the future and my financial situation.”