business news in context, analysis with attitude

by Kevin Coupe

Talk about an Eye-Opener.

A New York Times story earlier this week reported that "an estimated two million Americans age 60 and older who are in debt from unpaid student loans, according to data from the Federal Reserve Bank of New York. Its August 'Household Debt and Credit Report' said the number of aging Americans with outstanding student loans had almost tripled from about 700,000 in 2005, whether from long-ago loans for their own educations or more recent borrowing to pay for college degrees for family members.

"The debt among older people is up substantially, to $43 billion from $8 billion in 2005, according to the report, which is based on data from Equifax, the credit reporting agency. As of July 31, money was being deducted from Social Security payments to almost 140,000 individuals to pay down their outstanding student loans, according to Treasury Department data. That is up from just under 38,000 people in 2004. Over the decade, the amounts withheld more than tripled, to nearly $101 million for the first seven months of this year from over $32 million in 2004."

Yikes.

That's just amazing to me - that many people of my generation, for whom college costs were not nearly as high as they are today, are in the position where student loan payments are being deducted from their Social Security checks.

This speaks to a number of things, I think. This problem in part is because there is a segment of my generation that, because of a number of factors, has never been able to get ahead … and the recent recession has made things even worse. These folks may never be able to dig themselves out. (There will be some who will think of all these folks as deadbeats, but I think that paints the situation with an inaccurate broad brush. Sure, some people take advantage and want a free ride. But not everybody. And if we're willing to bail out banks and car companies, and offer subsidies to farmers and aid to foreign countries, it seems to me that some of that largesse could be directed closer to home.)

We can also talk about the utter absurdities of the student debt situation in this country, the high cost of a college education, and a political system that seems not to understand that the only way a society can prosper and advance is through an educated populace, and that money used to keep educational costs down is money invested in a nation's future.

But when I read those paragraphs in the Times, all I could think of is the long-term economic implications for the generation that currently is in college, members of which are amassing sometimes stunning levels of student debt. What is this going to mean in terms of their ability to buy houses, cars, and spend disposable income in a way that will drive the economy for the decades to come?

I read these numbers, and I realize how lucky I was that I was able to pay for my own education at a private university, taking out a minimum of student loans that I was able to pay back by writing a check for $63.86 a month for 10 years. (I finished paying off that loan in 1987, but that number remains burned in memory.) And I realize how lucky we've been to be able to send our kids to college, and they've emerged almost completely debt-free. (I give Mrs. Content Guy all the credit for that, and it is one of the best things we've done for our kids.)

But it seems to me that as a culture, we have to get our arms around this serious problem, which has economic, political and even national security implications. If we don't, it will be a societal failure of epic proportions.
KC's View: