Older students who go back to school do much better at paying back their college loans than young students, according to a new report by the Institute for Higher Learning Education Policy (IHEP) called “The Untold Story of Student Loan Borrowing.” According to the report, about 33 per cent of people who are at least 45 years of age when they are scheduled to start paying back federal school loans like Stafford and PLUS either fall behind on their payments at some point or default outright on their loans. That may not sound like a great number, but it’s whole lot better than the 60% per cent of young borrowers (under 21 when the start repaying) who default or become delinquent.
Two key reasons older borrowers do better, IHEP says, are that they A) have more marketable job skills that help them earn enough to pay their debts and B) have enough “financial literacy” to understand the loan terms they have signed on for and the full range of their repayment options. That contrasts with a dark picture of younger student borrowers painted in interviews that IHEP did with loan ombudsmen and others who work with delinquent borrowers. These lending experts said that, across the broad population of those struggling to pay back their college debts, borrowers generally haven’t done enough research to clearly understand what their repayment terms or interest terms are, and make their problems worse by failing to submit the right documents to avoid a default then they fall behind with payments.