While student loan consolidation has been at the heart of many of the “occupy” protests that began late in 2011, few people realize that older Americans are also building up education-based indebtedness that could well follow them for the rest of their lives. According to a report by Reuters released just this month, borrowing money to finance an education has increased in every age group, but the highest jump is in the 35 to 49 age bracket. Over the past three years, older students have racked up a 47 percent increase in debt levels directly attributable to the recession.

Many Returned to School as a Recession Shelter

With the unemployment rate hovering just under 10 percent for most of 2010 and 2011, older workers were often the first to lose their jobs as employers worked to trim costs. These older, laid-off workers found it difficult to compete against younger job candidates in their original career fields, and hoping to ride out the recession in a positive way, many returned to school, either to finish their degrees, to seek a higher credential, or to enter a completely new field. With their retirement savings already badly depleted by the rocky, erratic performance of stocks on Wall Street, these returning students opted to go into debt, essentially rolling the dice for a better future.

Alarming Debt Accumulation Foretells Future Disasters

Most analysts agree that the accumulating debt in this age group is alarming. Americans in the 35 to 49 age group tend to carry the bulk of their equity in their homes. The decision to return to school, and to finance that education with student loans, could well mean that if these people are not able to find a job that will both support their lifestyle and meet their debt obligations, they could lose their primary residence. Certainly retirement will be a long-deferred decision if it is possible at all.

This also begs the question of long-term care and insurance benefits. Even in the face of the so-called “reform” of the health care system in America, 52 million people have no health insurance coverage, and last year rates increased 8-9 percent. Medical debt is responsible for more than half of the personal bankruptcies filed in the U.S. each year. All of these factors taken as a whole create a potential perfect storm of financial woes in an age group that typically is enjoying its greatest degree of monetary stability in their lives.
Managing Debt Responsibly is Imperative

Since student loan indebtedness in America is now just under $1 trillion, managing those obligations in tandem with other debts, like credit card balances or a mortgage have signaled an end to America’s free money days. Now more people than ever before are seeking to consolidate their loans at a competitive interest rate so they can pay down their balances while maintaining the quality of their lives. Without this kind of responsible debt management, we could see a whole generation of Americans entering old age poorer than at any point since the 1930s.