Student debt: Not just for young Americans

More of today's college and university students are graduating with debt - and more of it - but the problem of student loan debt is not exclusive to young people.

A study released last week by the U.S. Government Accountability Office, in fact, shows that the percent of households headed by someone age 65 to 74 with student debt rose to 4 percent in 2010 from 1 percent in 2004. Further, the study found that outstanding federal student debt for that age group has jumped from $2.8 billion in 2005 to $18 billion last year.

And numbers are up among younger Americans as well, including Iowans, indicating the problem of student loans persisting later in life could continue and even become worse - unless alleviating measures are taken.

'We are very focused on minimizing student debt,” said Mark Warner, director of student financial aid for the University of Iowa.

Students who embark on their career with minimal to no debt 'start with a better frame of mind than someone overburdened by debt,” Warner said.

'Any debt, unfortunately, can weigh on you,” he said.

The average student debt for a UI graduate in the 2012-13 school year was $27,304 - up 78 percent from the $15,335 average student debt for UI students in the 2001-2002 school year. Iowa State University's average student debt in the 2012-13 school year was $29,458, and the University of Northern Iowa reported an average student debt that year of $23,151, according to Board of Regents documents.

Rising debt, in part, can be tied to skyrocketing costs for tuition, room and board. For UI full-time resident students, for example, the cost of undergraduate tuition rose from $3,116 in the 2001-02 school year to $6,678 in the 2012-13 school year - 114 percent, according to Warner.

Likewise, the cost for those UI students paying out-of-state tuition rose from $11,544 to $24,900 over the same period of time, representing a 116 percent increase.

Room and board for UI students increased 88 percent from $4,870 to $9,170 in the 2012-13 school year.

But Warner said the rising cost of higher education isn't solely to blame for mounting debt levels. In 2001-02, he said, tuition represented 26 percent of the total cost when you account for things like books and room and board. In the 2012-13, tuition made up a slightly higher percentage of the total cost - 30 percent, Warner said.

'So 70 to 75 percent of the cost is something other than tuition,” he said.

And, he said, the percent of students in Iowa graduating without any debt has remained fairly static - decreasing only slightly among UI graduates from 42 percent in 2001-02 to 39 percent in 2012-13, according to Warner.

'That's a good sign,” he said. 'I would like to see 100 percent graduating without debt. But I'm glad to see that it has been static.”

Among the tools UI offers on campus to address rising student debt and keep graduates from paying off loans into old age are financial literacy specialists and a website. The site, among its features, allows students to see what someone in their major typically earns for a starting salary, view how much they've borrowed to date, and review different repayment plans.

'And when we award students financial aid at Iowa, we always award them first and foremost any scholarship and grant money they qualify for,” Warner said. 'That will minimize borrowing.”

Financial literacy counselors also recommend students only borrow what they need, not more to support a lifestyle choice. In the 2012-13 school year, Warner said, 61 percent of the students who borrowed took out amounts exceeding their financial need, according to federal calculations.

'Every undergraduate student at UI, before we approve a private education loan, has to have a conversation with a specialist,” he said. 'We really try to discourage borrowing by choice, as opposed to by need.”

Warner said loans have become more common in recent decades but, according to the national study, most of the older Americans still paying off student debt incurred the obligation as a result of their own education, rather than the education of their children.

For those in the 65-to-74 age range, 82 percent of student loans were incurred for their own schooling. It was 83 percent for those 75 and older, the study shows.

Rosemary Anderson, 57, who works for the University of California, Santa Cruz, told a Senate committee last week about her ongoing battle with student debt and her fear that the Social Security check she'll start receiving in her 60s will be garnisheed to pay it off.

Through a divorce, illness and other financial woes, Anderson's $64,000 in student loans ballooned to more than $126,000.

'I find it very ironic that I incurred this debt as a way to improve my life,” she testified at a hearing before the Senate Special Committee on Aging, 'and yet I sit here today because the debt has become my undoing,”

Student debt is not the prevailing type of debt among senior citizens - mortgages and credit cards are most common. But about 706,000 households headed by someone 65 or older carry debt from their education - 3 percent of those households.

Sen. Elizabeth Warren, D-Mass., said 'We can't just bury our heads in the sand and hope that it goes away.”

'We need to face it head on and find solutions that will reduce the burden of student debt and provide real protection for borrowers who find themselves struggling to pay back their loans,” she said.

Warren authored the Bank on Students Emergency Loan Refinancing Act, which would allow students to refinance their loans. It was filibustered earlier this year, but Sen. Richard Durbin, D-Ill., the majority whip, has said that the Senate would vote on the bill this month.

Samantha Ehlinger, with the McClatchy Washington Bureau. contributed to this report.