More borrowers default on student loans than on mortgage or auto loans. Because many older people back these loans for younger relatives, they face severe penalties if the student defaults. Even bankruptcy will not discharge these debts, which can endanger retirement — including Social Security income — for the guarantors.
See also: Smart money moves to make by age 50.
Senate Majority Whip Dick Durbin, D-Ill., blames private loans, which can carry interest rates three times as much as government loans. He is calling for school loan policy changes, including legislation to make private student loan debt dischargeable in bankruptcy.
In this Inside E Street segment — Invest in Whose Future? — Durbin explains what he calls the $904 billion "debt bomb" and why it must be addressed immediately.
Senate Majority Whip Dick Durbin, D-Ill., has sponsored legislation to make student loan debt dischargeable in bankruptcy. http://durbin.senate.gov/public/
In this segment of Inside E Street, we see this study at work.
Jean Chatzky is AARP’s financial ambassador and a best-selling author.
Also of interest: Will you have enough money for a comfortable retirement?