What it's like repaying student loans at 70

Summary

Marketplace Morning Report: What It's Like Repaying Student Loans at 70

Release Date: May 19, 2025

In this insightful episode of Marketplace Morning Report, hosted by Nova Safo in place of David Brancaccio, listeners are guided through pressing economic developments and a deeply personal exploration of senior citizens grappling with student loan debt. The episode seamlessly weaves macroeconomic trends with individual narratives to paint a comprehensive picture of the current financial landscape.

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Rising U.S. Treasury Yields and Economic Implications (01:03 - 03:50)

The episode opens with a discussion on the recent uptick in long-term U.S. government bond yields. Nova Safo introduces the topic by highlighting that the 30-year Treasury yield has surpassed 5%, a significant milestone attributed to downgrades by Wall Street's major credit rating agencies.

Julia Coronado, founder and president of Macro Policy Perspectives, provides expert analysis:

“It tells us that the United States is bumping up against fiscal limits, that international and domestic investors are starting to charge the US more interest for its lack of fiscal discipline and potentially a little bit of the policy volatility that we've been seeing this year.”
(01:39)

Coronado elaborates on "policy volatility," referencing trade wars and a perceived breakdown in the rule of law, which heightens risks for long-term investors. The conversation pivots to the direct impact on consumers:

“It means consumers have to pay more to borrow. So mortgage rates are going to follow the treasury yields higher, as are rates on car loans and basically any kind of consumer borrowing. So consumers will feel the impact. Money is more expensive.”
(02:24)

This rise in borrowing costs signals tighter financial conditions ahead, particularly detrimental to sectors like real estate that were anticipating relief on interest rates. Coronado expresses concern over the broader economic outlook for the year:

“Yeah, absolutely. We had come into the year hoping for lower yields. A lot of sectors, real estate sectors in particular, were hoping for some relief on interest rates and we're just not seeing that.”
(02:58)

The segment concludes with a brief mention of the U.S. credit rating slipping below that of several European nations and the announcement of a new post-Brexit trade deal between Britain and the European Union aimed at reducing cross-border red tape.

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Repaying Student Loans in Retirement (04:20 - 08:01)

The core of the episode delves into the challenges faced by older Americans still burdened by student loan debt. Marketplace's senior economics contributor, Chris Farrell, introduces the story of Lorelai Taylor, a 70-year-old from San Diego managing her finances on Social Security and modest self-employment income.

Lorelai Taylor shares her experience:

“I kind of do whatever anyone needs help with. Like one gal I'm working with now, her husband passed away. She can't emotionally handle getting rid of his clothes. I go every week for a few hours and we go through her house and I take away the stuff so she doesn't have to deal with it.”
(04:51)

Despite making consistent payments over the years, Taylor still owes $17,000 on her student loans, accumulated from her education in her early 40s at Washington State University. The narrative highlights the broader trend of senior loan borrowers, with the number of individuals aged 62 and older carrying student debt increasing sharply.

Kartik Manekin, a graduate student at the New School for Social Research, provides context:

“Amount of that debt is also debt that's more than 10 years old. So, like very much beyond the point of when you would expect them to have been able to pay off that debt.”
(06:20)

Taylor participates in the SAVE program (Saving on a Valuable Education), an Income-Driven Repayment Plan that offers flexibility. However, the program faces legal challenges and political uncertainty, leaving borrowers like Taylor in a precarious position:

“I'm still buying groceries, and even if I was, when I was making the payments, you know, it just has loosened up my tiny little budget, you know, a bit. And I can buy an extra handbag a year. That's my kryptonite. And other than that, I live pretty frugally or, you know, purposefully.”
(06:55)

Farrell underscores the severity of the issue, noting a 3,000% surge in Social Security beneficiaries facing loan garnishments between 2001 and 2019, a number expected to grow as the federal government resumes loan repayments in May. The segment concludes with a discussion on the uncertain future of federal student loan policies, as various political entities propose reforms amidst a tumultuous system.

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Closing Remarks (08:01 - 08:40)

The episode wraps up with acknowledgments of the collaborative efforts underpinning the "Buy Now, Pay Later" series, highlighting a partnership with Next Avenue, a nonprofit dedicated to news for older adults. While brief ads and light-hearted exchanges occur towards the end, the core content provides a compelling look into the intersection of economic policy and personal finance challenges faced by the aging population.

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Key Takeaways:

• Economic Shift: The rise in U.S. Treasury yields above 5% reflects fiscal constraints and policy volatility, leading to higher borrowing costs for consumers and potential slowdowns in sectors like real estate.

• Senior Debt Burden: A growing number of older Americans are still repaying student loans, with many entering retirement years still owing significant amounts. Programs like SAVE offer some relief, but legal and political obstacles create uncertainty.

• Policy Implications: The evolving landscape of federal student loan policies poses additional challenges for senior borrowers, with potential increases in loan defaults and garnishments impacting Social Security recipients.

This episode of Marketplace Morning Report offers both macroeconomic insights and human stories, highlighting the intricate ways in which government policies and financial systems directly affect individual lives, especially among the elderly.

Transcript

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[Nova Safo]

Borrowing rates are rising for Marketplace. I'm NovaSafo in for David Brancaccio. Long term yields on U.S. government bonds are on the upswing this morning. The 30 year is above 5% after the last of Wall Street's big three credit ratings agencies downgraded U.S. sovereign debt. Moody's pointed to persistent federal budget deficits. I'm joined by Julia Coronado, founder and president of Macro Policy Perspectives. Good morning.

[Julia Coronado]

Good morning.

[Nova Safo]

So what does the jump in US treasury yields tell us? Particularly that above 5% yield in the 30 year Treasury?

[Julia Coronado]

It tells us that the United States is bumping up against fiscal limits, that international and domestic investors are starting to charge the US More interest for its lack of fiscal discipline and potentially a little bit of the policy volatility that we've been seeing this year.

[Nova Safo]

And when you say policy volatility, you're.

[Julia Coronado]

Referring to the trade wars and sort of the breakdown in the rule of law. That certainly raises risks for investors who are buying 30 year securities where the US is the other side of the transaction.

[Nova Safo]

So when we See Long term U.S. debt yields rising like this, what is the impact to consumers?

[Julia Coronado]

It means consumers have to pay more to borrow. So mortgage rates are going to follow the treasury yields higher, as are rates on car loans and basically any kind of consumer borrowing. So consumers will feel the impact. Money is more expensive.

[Nova Safo]

And right now does that concern you in terms of the U.S. economic outlook in this year at least?

[Julia Coronado]

Yeah, absolutely. We had come into the year hoping for lower yields. A lot of sectors, real estate sectors in particular, were hoping for some relief on interest rates and we're just not seeing that.

[Nova Safo]

Julia Coronado, founder and president of Macro Policy Perspectives and professor at the University of Texas, Austin, thank you very much.

[Julia Coronado]

My pleasure.

[Nova Safo]

And incidentally, US Credit is now rated lower than that of the European Principality of Liechtenstein, as well as Germany, Singapore and a handful of other countries. There's news this morning that Britain and the European Union have struck a new trade deal. It's an effort at a post Brexit reset. The UK's Prime Minister said the deal will reduce cross border red tape.

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[Nova Safo]

Now the latest installment of our ongoing series Buy Now, Pay later, about the increasing number of older Americans entering retirement while still saddled with debt. There are several million who are still paying off college loans. Marketplace's senior economics contributor Chris Farrell reports.

[Chris Farrell]

Lorelai Taylor is 70 years old. She lives prudently in San Diego on Social Security and some self employment income, mostly helping out attorneys or families when someone has passed away.

[Lorelai Taylor]

I kind of do whatever anyone needs help with. Like one gal I'm working with now, her husband passed away. She can't emotionally handle getting rid of his clothes. I go every week for a few hours and we go through her house and I take away the stuff so she doesn't have to deal with it.

[Chris Farrell]

Taylor is still paying off for student loans taken out decades ago briefly. Taylor went to college for two years after high school and in her own words, quickly flamed out, I don't want.

[Lorelai Taylor]

To do this and ended up working in banking and, you know, got married, had kids, had a family and the whole thing until I got into the antiques business.

[Chris Farrell]

The antiques business eventually closed. She decided to go back to school in her early 40s to get her undergraduate and graduate degrees in design at Washington State University. She paid for school with a combination of alimony, child support, waiting on tables and bartending on weekends, research and teaching assistantships, scholarships and of course, student loans.

[Lorelai Taylor]

The loans never got paid off. I made all the payments. You know, all those years I added up once what I paid, it was like 30,000 something and I made all the payments, but I still owe them 17,000 right today, the number of student.

[Chris Farrell]

Loan borrowers 62 years and older is up sharply. And like Taylor, most of the loans were taken out by older adults to pay for their own education. Kartik Manekin, graduate student at the New School for Social Research, adds, a good.

[Kartik Manekin]

Amount of that debt is also debt that's more than 10 years old. So, like very much beyond the point of when you would expect them to have been able to pay off that debt.

[Chris Farrell]

Taylor is currently enrolled in the SAVE program. SAVE stands for Saving on a Valuable Education. The Income Driven Repayment Plan offers greater flexibility than other options. However, SAVE is frozen in the courts. The Trump administration shows little interest in the option. Taylor routinely checks with her student loan service provider, and she's prepared to restart her payments.

[Lorelai Taylor]

I'm still buying groceries, and even if I was, when I was making the payments, you know, it just has loosened up my tiny little budget, you know, a bit. And I can buy an extra handbag a year. That's my kryptonite. And other than that, I live pretty frugally or, you know, purposefully.

[Chris Farrell]

Other Social Security beneficiaries with student loans are in tougher financial straits. A good number defaulted on their loans, and the government can garnish their Social Security payments. Between 2001 and 2019, before collections on defaulted student loans were stopped, Social Security beneficiaries dealing with garnishment rose by 3,000%. The number will likely rise now that the federal government has resumed repayments in May. The student loan system is also in turmoil. Republicans in Congress, the White House, and the Department of Education are pushing various proposals to remake the federal student loan system. While it's unclear what changes will take effect, the uncertainty is unsettling for older student borrowers. I'm Chris Farrell for Marketplace.

[Nova Safo]

Our Buy Now, Pay later project is in partnership with Next Avenue, a nonprofit news platform for older adults produced by Twin Cities pbs. I'm Nova Safo with the Marketplace Morning Report from apm, American Public Media.

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[Kartik Manekin]

I think you're breaking into this wall regardless.

[Chris Farrell]

I was hoping you wouldn't say that. I need to go and get some whiskey.

[Kartik Manekin]

I think I would get the whiskey for sure.

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