Older people are giving up hope of paying off their student loans before they die: 'There's a real fear in dying in this'

• Over 8 million borrowers over age 50 hold 22% of the federal student-debt load, or $336.1 billion.
• Insider spoke with borrowers with debt burdens they fear won't be paid in their lifetimes.
• One borrower started with $79,000 in debt, paid $175,000, but still has a balance of over $200,000.

At 59 years old, David Wise has $236,485 of outstanding student loans, according to documents reviewed by Insider. That's after making about $175,000 in payments over four decades.

He said that when he graduated from law school with the goal of becoming a public-interest lawyer, his debt load stood at about $79,000, and he had initially taken out just $7,500 in loans when he entered undergraduate school in 1981.

How is this possible?

"I feel like I've actually been responsible, and I've paid a considerable amount of money on my student loans," Wise said. "But it really is a debtor's prison."

It's not like Wise couldn't find work. He did start off in a legal career, but the low salary that came with public-interest work forced him to take on restaurant work to make ends meet, he said. Later, he switched to food-service full time, but a divorce caused his income to change dramatically.

Ultimately, he said his wages were garnished and he defaulted on his student loans, which led to an accumulation of collection and penalty fees and growing interest, all while he was working to get enough money to pay off his balance.

He said he now makes a livable income but not enough to pay off the accumulated debt, and he doesn't know what to do about it.

According to an estimate from the American Association of Retired Persons released in March, 8.4 million borrowers ages 50 and older hold 22%, or $336.1 billion, of the total federal debt load, with what could be as much as 10% interest charged annually adding to the growing pile.

"Student debt isn't just crushing young people: 6.3 million borrowers ages 50 to 64 and nearly a million people over 65 are still paying for a loved one's education or their own," Sen. Elizabeth Warren of Massachusetts told Insider. "Student debt is also one of the biggest contributors to the rise in the amount of debt seniors hold overall."

In a CNBC op-ed she coauthored with Senate Majority Leader Chuck Schumer in February, Warren highlighted how the government would even garnish Social Security benefits to make up what is owed in student-loan payments. In 2015, she said, the government garnished the Social Security checks of almost 114,000 borrowers ages 50 and older.

Like many of his peers, Wise doesn't foresee his loans being paid off before he dies.

"I have no motivation whatsoever to pay anything more than I've already paid," Wise said. "I've done my duty to the student-loan program many times over."

'You are on a hamster wheel, and you will not get off'

Linda Navarro, 70, borrowed $20,000 in 1990 for graduate school, according to documents reviewed by Insider. She owes $145,000 and has an estimated payback of $212,544.

"When student loans took over my life, I stopped looking forward to anything," she told Insider. "You are on a hamster wheel, and you will not get off. You know that you will never get off."

Before attending graduate school, Navarro had served in the Navy but didn't qualify for loan forgiveness under the GI Bill because she missed the 10-year window to use the bill's student-loan-forgiveness benefits. Because of income losses during school, she said she ended up losing her home and was not even able to complete her graduate program.

Navarro said she initially attempted to pay off her loans in monthly amounts she could afford, but as the bills grew, she went into forbearance. She later learned that her salary was being garnished, and now she is on an income-driven repayment plan, which sets her monthly payment based on income.

"There's a real fear in dying in this," Navarro said. "And the best part is that my family has to prove that I died so the loan will die as well."

'It's a corrupt lending system'

The student-loan system isn't broken - it's corrupt, Navarro said. She referenced her substantial loan balance and said she received a lack of help from her loan servicers, the government, and elected officials.

"It's a corrupt lending system that has been allowed to cause unbearable agony and suffering," Navarro said. "It's enough. I want my life back."

According to a Wall Street Journal report, Jeff Courtney, a former JPMorgan executive, found that for over three decades, the government had been making the student-loan system look profitable when in reality more and more borrowers were going into default.

When examining why his findings did not align with the government's profit expectations, Courtney found that Education Department budget officials weren't looking into borrowers' credit histories to estimate the likelihood that they would repay their loans, The Journal said. And when borrowers defaulted, the government kept charging interest, he found.

The Education Department did not respond to Insider's request for comment.

'I just want to be represented'

Warren and Schumer's CNBC op-ed said that the student-debt crisis was effectively punishing people pursuing higher education.

"Older Americans with student debt include people who may not have had a chance at a degree when they were younger because they had a family to support, but took a shot at the American dream and went to college later in life," the lawmakers said. "Now their student debt eats away at the retirement security they worked so hard for."

Theresa Teders is one of those people.

Now 67 years old, she got a bachelor's degree in 2004 and a master's degree in 2008. She entered the social-services industry after graduation, working with adults with special needs, just before the Great Recession hit.

After Teders lost the job she went to school for, she started driving for Uber and Lyft, but the pandemic affected gig-economy work, too. So Teders is living on Social Security and unemployment benefits and carries a student-debt load of $46,000.

"I just want to be represented," Teders said. "Everybody I talk to says, 'Yeah, older people should have their debt forgiven, too.' But that's never expressed, and if it's not expressed, how does the government and federal lawmakers know that we care out here?"

Teders and millions of other Americans rely on Social Security to help them pay for basic needs, and Warren and Schumer said taking away those benefits left older people in a "cycle of inescapable debt."

Many Democratic lawmakers, foremost among them Warren, are keeping pressure on President Joe Biden to cancel $50,000 in student debt for every American. Amid calls for him to use his executive authority to get the job done, Biden has asked the Education and Justice departments to review whether it's in his power.

There's a clear solution, according to Warren. She told Insider: "It's time to cancel student-loan debt, and President Biden can get it done using existing executive authority."

Teders said that any form of forgiveness would significantly benefit her and that she wanted to ensure that older Americans were not left out of the conversation.

"When you're older and have spent years and years giving back to the community, there's very little 65- and 70-year-olds or older are going to be able to do to make that kind of money to pay off these loans," Teders said. "We use what we have to survive and to live."