Elderly Americans have more student loan debt than ever and are more likely to become chronically unable to make payments than younger borrowers. Those findings from a new report by the Government Accountability Office took center stage at Wednesday’s Senate hearing on how seniors deal with unprecedented education debt.

Federal student debt among Americans 65 and older increased sixfold since 2005, reaching $18.2 billion in 2013, according to the report. Over 80 percent of elderly borrowers were still struggling to pay off loans they took out to pay for their education, which suggests that the debt ballooned, in part, due to interest.

United States Government Accountability Office

Seniors hold a small minority of all student debt in the country, but their fate is a cautionary tale for today’s students taking out more and bigger loans. It is also a sign of financial stress to come for people who are heading toward retirement.

Some 31 percent of the student loans held by Americans aged 65 and older were in default last year. That makes the elderly about twice as likely to hold defaulted loans as Americans under the age of 50. Defaulting on student loans is bad for anyone: It can harm your credit and multiply your debt by adding fees. For older Americans, the consequences can be especially dire.

United States Government Accountability Office
United States Government Accountability Office

More elderly Americans are seeing retirement benefits cut to order to repay education debt, as Bloomberg Businessweek reported last month. The government reduced the Social Security payments or other retirement benefits of 155,000 people last year to pay off student loans, according to the new GAO report, up from just 31,000 in 2002.

A 1998 law specified that the government could not seize more than 15 percent of people’s retirement benefits or leave them with a check of less than $750. At the time that limit was above the poverty line. The limit hasn’t since increased and is now about $181 under the poverty threshold for a person over the age of 65.

Most of those who saw Social Security payments slashed to repay student loans in 2013 were living on benefit income that was under the poverty line.  “If the offset limit had been indexed to match the rate of increase in the poverty threshold,” the report noted, “in 2013, 68 percent of all borrowers whose Social Security benefits were offset for federal student loan debt would have kept their entire benefit.”

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