CFI in Focus: Understanding Older Student Loan Borrowers

Media and research attention has highlighted the exponential growth in borrowing for higher education over the past few decades. Often overlooked is the significant increase in student debt held by middle- and retirement-aged borrowers. This CFI in Focus analyzes student loan portfolios for borrowers of various age groups using a large sample of anonymized credit bureau data from the years 2003 through 2019.

According to the sample, the share of individuals with student loans at age 30 more than doubled between 2003 and 2019, from 16 percent to 35 percent. But the largest relative increases occurred among those well into their 20s. The share of consumers with student loan debt at age 40 increased from 5 percent in 2003 to 23 percent in 2019; the share of 65-year-olds who had student loan debt increased from 0.8 percent to more than 6 percent over the same time period.

Borrowers aged 50 or older held 20 percent of all student loans outstanding in 2019: $294 billion of the national total of $1.45 trillion. The balances have grown fastest for those between the ages of 60 and 69, whose total debt load in 2019 was over $88 billion, representing 6 percent of the U.S. total. This substantial portion of student debt owed by older borrowers defies the common idea that student loans are only a Millennial problem.

The researchers offer reasons for the increase in student loans among older groups. First, higher loan balances are often associated with longer terms stretching into decades, which means that yesterday’s borrowers are more likely to still have education debt today. Second, as college costs soar, young borrowers who reach their federal student loan limit increasingly need assistance from their parents or grandparents through Parent PLUS loans.¹ Research done by the Consumer Financial Protection Bureau (2017) shows helping a family member pay for school was the reason given by roughly 73 percent of the borrowers aged 60 or older. The data also show that the increase share among older borrowers was not the result of cosigning loans but in taking loans under their own names.

A potential consequence of larger and longer-lasting student loan balances is that borrowers may be deterred from taking on other kinds of debts, such as mortgages or personal loans. In 2003, individuals in groups aged 30‒39 commonly had a combination of debts, such as student loans and a mortgage. By contrast, in 2019, individuals who had student loans, especially in older groups, tended only to have student loans. This matter deserves further attention in future research, particularly to sort out the effect of new cohorts who hold student loans (compositional effect) from the effect of individuals’ decisions in each cohort over their lifetime (longitudinal or panel effect).

The views reflected in this report represent those of the authors and not necessarily those of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.