An updated report from Schwartz Center for Economic Policy Analysis examines how political differences heading into the presidential election may affect policies on student debt.
The assessment is a follow-up from a May analysis that showed that older workers often are saddled with student loan debt that hampers their ability to be financially secure in retirement.
According to report author Karthik Manickam, 2.2 million people aged 55 or more years have outstanding student loans taken out either for themselves or a spouse’s education. That’s more than 1.4 million workers and more than 820,000 unemployed people in that age group, he said, based on data from the Federal Reserve Board’s 2022 Survey of Consumer Finance.
Manickam is a PhD student in the economics department at the New School for Social Research and a Schwartz Doctoral Research Fellow at SCEPA, suggests that policy interventions such as loan forgiveness, income-driven repayment plans, and the end of Social Security garnishment for student loans could help older workers overcome their debt burdens and save for retirement.
Older workers with student debt are likely to fare better under Democratic leaders, according to Manickam’s analysis, based on prior efforts at student loan reform.
“The administration’s new loan forgiveness policy draws from the Higher Education Act to target loan forgiveness for debtors who have significant interest accrual or capitalization; students from universities with poor student outcomes; debtors with loans that began more than 20 years ago; and borrowers who were eligible for forgiveness but had not applied yet. Older Americans with student debt are likely to fall into one of these categories and thus stand to benefit,” Manickam said.
The author also noted that attempts at student debt reform have faced legal challenges.
On the Republican side of the aisle, attempts to reform student debt policies have fallen flat, he said.
“Evidence suggests that a Republican-controlled Congress with a Trump/Vance presidency would oppose student debt forgiveness, as they have in the recent past. Although the 2020 Trump administration did not repeal existing loan forgiveness mechanisms, it did take steps to limit its implementation,” Manickam said.
“Based on the policy evidence, a Republican-controlled Congress and presidency would likely deprioritize or halt student debt reforms, to the detriment of the millions of older Americans whose ability to retire is tied closely to student loan forgiveness,” he added.
