Saturday, March 4, 2017

Oldsters Going Back To School? A Waste Of Money And Debt You Don't Need

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The buzz from the Neoliberal enclave the past ten years or so has been for the senior segment of the populace to "get more education" or "retraining" to access more lucrative work to supplement their retirement income, or even have more of it. These fools have peddled the bilge that "you're never too old to do it", and hey - with possible Social Security cuts - better to be safe than sorry.

Now, we read in the 'Retirement View'  (TIME, Feb. 20, p. 22, by Hayley Sweetland Edwards)  That oldsters:

"are now the fastest growing group of student borrowers and own, on average, $23,500, up from $12,000 in 2005."

And the real kicker:

"Altogether the over-60 set now carries $66.7 billion in student debt."

Even reading that twice made it no less incredible, mind boggling.   Especially on next reading, "the trend has Washington policy makers wringing their hands".

Well, didn't they all recite the refrain some years ago that the elderly set needed to retrain and "go back to school" to enable them to grab higher paying jobs to afford retirement? Yeppers, I have several sources ('Mother Jones', The Nation, The Atlantic) filled with such codswallop. Most recently: 'Career Pivot Is Ultimate Test  Of Self-Reinvention', (Washington Post) And now what do we behold? Well:

"This student loan crisis is preventing people from living with dignity in retirement"

The column does cite two main causes for this senior descent into student loan debt and now struggling in retirement to repay it:

1) Grandparents (and parents) are co-signing loans to support the younger generation.

2) Older Americans are increasingly taking out student loans for themselves, the proverbial "career pivot" if you will.

Both of these unwise moves can be grasped when one sees the dwindling number of blue collar jobs available - but that was always coming, if not from globalization then via automation. To fix ideas on the absolute nature of the bad decisions, the column then cites a waitress who went back to school in her 40s (not even in the 60s, like many now) to earn a degree in occupational therapy.  As the piece notes:

"While her new profession yields a higher income it has also left her with a lifetime of debt, with the consolidated loans tallied at $42, 000."

Of course, for a 60 or 65-year old this would be financially suicidal, unless one had plenty of money set aside. Like at least $600,000.

Let's look at options here. In terms of (1) it is axiomatic that no older person, over say 55, should be co-signing loans for a kid to attend university. Community college? Sure, maybe - and don't knock it!

The natural route now to craftsman status and good future work (e.g. for auto mechanics, plumbers, electricians etc.) in the U.S., as noted by Dick Hilker in his op-ed piece in the Denver Post from 2 years ago, is the community college. Hilker quoted Rhonda Bentz (the state system's media and government relations director), noting  that :

"the Voc-Technical route is the educational system's best kept secret. Students come for two year degrees and then get real jobs."

As Hilker goes on to note:

"In other words there are solid alternatives to spending big bucks at Big State U. to major in Tibetan Culture or Music Appreciation before winding up as a clerk at Mega-Mart."

A brutally frank observation, but which no rational person can dispute. And certainly a retiree or near retiree contemplating co-signing a loan for a grand kid!

Here's another brutal fact: those who believe they will be saved by higher aspirations, i.e. going into academia via the Ph.D. route, are also in for a shock. Universities across the board are now scaling back costs by hiring more and more adjunct professors and lecturers, many of whom now have to go on food stamps because they can't cobble together enough 'gigs' (teaching courses at different colleges, usually)  to earn even a lower working class level income.

The community college route also provides an alternative track for those seniors who wish to do a career pivot but don't wish to go into hock over massive student loans, say to get a university degree (or additional one).  In the case of the WaPo article on "career pivots" I cited earlier, both the individuals who achieved it were already coming from good paying jobs (one a medical doctor) so didn't have to worry about accruing lots of student loan debt. The doc (aspiring to be a statistical biophysicist)  also applied for a "Pioneer Award" from the National Institutes of Health that "made it possible for him to go back to the classroom"

But not all seniors are so fortuitous.

The main things seniors need to know before committing themselves to student loans for any reason are:

a) If seniors become ill or incapacitated - or even if they don't - they still have much less time to pay back loans than a young sprat.

b) Making monthly payments on a loan is also likely to be a lot more difficult because first, you're likely on a fixed income and second, even if you land a better job the remuneration is unlikely to grow as fast as it would be for a young student grad.

c) The loan burden often puts seniors in a bind to the extent that - according to a Consumer Financial Protection Bureau report- those 60 and older forego medical care and taking needed prescription drugs.

By 2015, a full 40 percent of student loan borrowers were in default meaning the government can garnish wages or even Social Security benefits to service payments.

The bottom line here? Make do with what you have, give up the fantasies of "career pivots" unless you are independently wealthy (that goes for co-signing loans for grand kids too). And if you need mental stimulation go for online open  courses - such as the "open courses" offered by Yale, e.g.

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