When Michele Fitzgerald lost her job and the ability to repay the education loan she took out to finance the education of her daughter Jenni, she did something unusual. She became a so-called boomerang mom. Unable to survive in any other way, she moved in to Jenni's townhouse and allowed her daughter to cover the majority of her living expenses.
This is an unusual situation, and a reversal of the one that has become increasingly familiar since the unemployment rate for recent college graduates tanked in the wake of the 2008 financial crisis. Yet, according to CNBC, as parents take on an ever greater chunk of debt to put their children through college, the resulting fiscal insolvency could put an increasing number of children in the caretaking position over their progenitors.
At 35, Jenni could be legitimately counted as a success. After graduation, she was able to land a well-paying job in public relations and has already begun to pay down some of the student loans that were taken out in her name. Her mother, at 60, isn't quite so lucky. And she is not alone.
There are record numbers of student borrowers in financial distress, according to federal data. But millions of parents who have taken out loans to pay for their children's college education make up a less visible generation in debt. For the most part, these parents did well enough through midlife to take on sizable loans, but some have since fallen on tough times because of the recession, health problems, job loss or lives that took a sudden hard turn.
Parents finding themselves under the weight of debt problems are also much less vocal than students who are in the same situation. Through the work of activists like the Occupy Movement, students' loan problems are well documented and widely discussed. Those plaguing parents like Michele remain mostly in the shadows.
"You don't want your children, much less your neighbors and friends, knowing that even though you're living in a nice house, and you've been able to hold onto your job, your retirement money's gone, you can't pay your debts," said a woman in Connecticut who took out $57,000 in federal loans. Between tough times at work and a divorce, she is now teetering on default.
But just because it isn't public doesn't mean the problem isn't growing. The proportion of people over 60 who are holding a loan and are more than 90 days overdue has jumped to nearly 10% this year from 6% in 2005. There are also growing numbers of people holding federal loans who are getting their Social Security checks garnished for repayment. There were only 23,996 such garnishments recorded in 2001. This year, there were nearly 120,000.
The federal government does not track how many of these older borrowers were taking out loans for their own education rather than for that of their children. But financial analysts say that loans for children are the likely source of almost all the debt. Even adjusted for inflation, so-called Parent PLUS loans — one piece of the pie for parents of all ages — have more than doubled to $10.4 billion since 2000. Colleges often encourage parents to get Parent PLUS loans, to make it possible for their children to enroll. But many borrow more than they can afford to pay back — and discover, too late, that the flexibility of income-based repayment is available only to student borrowers.
Although shouldered mainly by parents, these kinds of problems also affect their children. As one man who earned two bachelor's degrees with the help of loans taken out by his mother explains, he feels incredibly guilty by the financial burden he put on her — so much that he feels "paralyzed" by his reluctance to discuss it with her.
In another extreme case, crushing debt load was mentioned in a suicide note of a step-parent of one recent law school graduate.