Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Aug 24, 2012

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The current student debt crisis has been centered on the impact it is having on young college-aged borrowers. But despite this emphasis on youth, America’s younger generations are not the only group affected by private and government student loans.

The baby boomer generation, which is now reaching the age of retirement, has been keenly impacted by this debt crisis, yet is rarely mentioned amongst the onslaught of youth-centric student debt news.

The primary culprit in enabling this student debt crisis to hurt the aging baby boomers is The Debt Collection Improvement Act of 1996. That act gave the government the power to withhold a percentage of social security payments for retirees that defaulted on debt owed to the government, including government student loans.

Unfortunately, a good amount of this population borrowed (and are still paying) government student loans.

According to the New American, the federal government cut the social security checks of over 110,000 retirees between January and August of this year. That is almost a doubling of the social security checks cut in all of 2011.

This influx in reduced social security checks not only signifies a problem with our current federal student loan system, but it’s also thrusting our older population into impoverished income levels.

Social security checks cannot be reduced past $750, but, given the debt situation of many, monthly checks of $750 is likely all they will ever see.

“It’s quite extraordinary because normally social security benefits cannot be touched by creditors. When you think about it, $750 a month is less than the poverty line. It’s not a lot of money for people to have,” said Deanne Loonin, an attorney at the National Consumer Law Center in an ABC News interview.

According to a report from the New York Federal Reserve, more than 17 percent of government student lending borrowers are over the age of 50. Student financing, be it from private or government student loans, is exempt from bankruptcy, even for middle-aged adults.

“This is really the only consumer loan out there that people cannot get rid of,” said Smart Money’s AnnaMaria Andriotis in a New American interview.

Retirees struggle to handle their own student debt which was acquired years if not decades ago during their time in college.

“But in most cases, these loans aren’t even their own loans. And that’s what makes this whole situation really sad,” said Andriotis.

The amount of financing lent to parents for the college education of their offspring has risen by 75 percent since the 2005-06 academic year, as reported by Forbes. On average, parents have roughly $34,000 in college-related debt. That number rises to roughly $50,000 over a standard 10-year repayment period.

Recent studies by the Federal Trade Commission (FTC) have shown that 75% of all defaulting loans with co-signers are ultimately repaid by the co-signer, and not the original borrower.

Co-signers clearly are taking the brunt of payment requirements meaning they have fewer funds for the remainder of each month let alone beyond that. This lack of funds is particularly frightening for those on the verge of retirement.

According to the Employee Benefit Research Institute nearly 45 percent of adults aged 48 to 64 will not have enough savings to pay for basic needs and uninsured medical costs upon entering into retirement thanks to private and government student loan debt.

The recession may hold partial blame but so too does the trend of rising tuition costs. In the last two decades, fees have almost tripled, quickly outpacing wage increases. The massive national student debt buckles at an estimated one trillion dollars, 85 percent of which accounts for government student loans.

Retirees, having contributed to our nation’s success long ago, do not need the burden of government student loans to weigh on them in their golden years. Whether they cosigned financing, or simply carried debt past their middle-aged years, it is clear that the protesting youth across the nation are not the sole victims of the student debt crisis. For many of these elderly borrowers salvation may only come with bankruptcy reform laws. Unfortunately, for all too many of these retirees, legal changes may arrive too late.