Student debt will follow him to the grave — and he still makes payments
By Tim Grant / Pittsburgh Post-Gazette
William Pearson turns 69 next month — and he’s still chipping away at a student loan he took out more than three decades ago.
The $11,000 he borrowed to attend the now-defunct Sawyer Business School in 1990 has mushroomed to $30,000, the result of compound interest, late fees and periods of missed payments. He knows he will never pay it off. But he sends in $19 every month out of his Social Security income to keep his account out of default.
“I know that I will die with this debt,” the South Park resident said. “I don’t know how these people figure I owe them all this money.”
Mr. Pearson’s case might seem extreme. But even those who avoid default can wind up financially shackled for decades.
For millions of student loan borrowers, the stakes got higher on May 5 when the Education Department ended a long period of payment leniency, which began during the pandemic and during which no one was penalized for not making payments. Now, however, borrowers in default may be subject to penalties including wage garnishment, tax refund seizures and even reductions to Social Security funds and disability income.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Education Secretary Linda McMahon said in an April 21 press release announcing the resumption of collections.
Education Department records from the federal government suggest that student debt has reached $1.6 trillion — an all-time high — and that more than 5 million borrowers have not made a monthly payment in at least 360 days, and many for more than seven years. Only 38% of the 42.7 million borrowers are current on their student loans, records show.
It’s unusual for someone of Mr. Pearson’s age to still be paying off student loan debt — but it certainly happens.
Nearly 3 million Americans 62 and older are still carrying federal student debt, according to Education Department data.
“Some of them are parents who borrow Parent Plus loans [to help their children or grandchildren go to school] and people who borrow for graduate school,” said Mark Kantrowitz, a Chicago-based student loan expert.
‘Always looking over my shoulder’
Born and raised in the Strip District, Mr. Pearson never imagined he would be dragging college debt into retirement.
At age 35, he was working in a warehouse for Giant Eagle when he decided to enroll at Sawyer Business School, Downtown. He secured the $11,000 in federal loans to earn an associates degree in specialized business.
“I took marketing and sales and a couple of psychology classes. It was fun,” he said. “I was the old man in the class.”
After 14 months, he graduated and hoped to go further. Robert Morris University had accepted his credits toward a bachelor’s degree, he said, so he enrolled.
But he withdrew a couple weeks later. “My mom got sick,” he said. “And I couldn’t finish it.”
His mother passed five years later, and by then, Mr. Pearson’s momentum was gone. He never returned to school.
What followed was a spiral of odd jobs, long stretches of unemployment, rehabilitation and mounting financial stress. The student loan payments added to his problems, he said. Interest piled on. The calls from debt collectors started and did not stop.
“They just wanted too much money,” Mr. Pearson said. “They wanted $200 and $300 a month.”
He went into alcohol rehab at the Veterans Administration Hospital on Christmas day in 2009. When he came out, the payment on his loan was lowered to $80 a month. That was manageable, he said. But the account was then sold and resold to several loan servicing companies. Before long, the minimum payment went up again.
Mr. Pearson said he decided to simply stop paying. That’s when the student loan collection activity got so aggressive that he said he was afraid to open his mail or answer his telephone.
“I was always looking over my shoulder,” he said.
“One time they threatened to take half my Social Security,” he said. “I threatened to move to Mexico so they couldn’t touch my money. ... I worked out a deal for $100 a month. I sent them one payment and they left me alone for two more years.”
Unknown details of debt
Three years ago, while working as a deliverer for GrubHub, Mr. Pearson said he received a call from a student loan servicer offering to reduce his monthly payment to $19.
“I told them yes, I could do that,” he said. “With me owing so much, I didn’t know what the game was. But I said, let’s waste this $19 a month and watch my credit score.
“I gave it a shot. I never looked back after that.”
The new policy on student loan collections will hit harder for some borrowers.
President Donald Trump paused federal student loan payments and interest accrual in 2020 as a relief measure during the pandemic. The pause was extended multiple times by the Biden administration, but a final grace period for loan repayment ended in October 2024.
Now, wage garnishment and tax refund seizure has gone into effect for at least 195,000 borrowers who are in default, although the number of borrowers in default is much higher, according to Mr. Kantrowitz. Borrowers who don’t make payments for nine months go into default status, which is reported to credit bureaus and can trigger collections activity.
The federal government is uniquely powerful among creditors, being the only creditor that doesn’t need a court order to garnish wages. Indeed, the federal government can take up to 15% of a paycheck or Social Security income and can seize 100% of a tax refund to offset student loan debt.
But the system isn’t airtight.
Wage garnishment can fail when borrowers are self-employed, paid under the table or switch jobs frequently.
By law, wages also can’t be garnished during the first 12 months of a new job — giving cover to borrowers who cycle through short-term work.
Mr. Kantrowitz said most student loan repayment plans have a $50 minimum monthly payment, and he believes Mr. Pearson has a repayment plan based on his income. Mr. Pearson said he isn’t sure how he got authorized for a $19 payment.
That’s not unusual, Mr. Kantrowitz said.
“When talking with borrowers who have defaulted or are struggling with their loans, they often don’t have details of their debt,” Mr. Kantrowitz said. “You ask them, who’s your lender? They don’t know. What’s your payment? What’s your interest rate? How many payments have you made? They don’t know.”
For now, Mr. Pearson said he can manage the $19 monthly student loan payment — even if they stretch on forever.
He lives alone in a modest one-bedroom apartment that costs him $1,245 a month — and the rent climbs by $45 every year. His car, a 2021 Toyota C-HR he bought for $25,000, comes with a $387 monthly payment. Life insurance runs him $70 a month, and car insurance is nearly as high as the car payment due to an accident.
Then there’s the winter electricity bill, which soared to $400 last year. When a bill like that hits, it wipes out any wiggle room in his budget, he said.
He brings in about $2,400 a month — $1,400 from Social Security and $1,000 from a Giant Eagle pension.
It sounds decent on paper. But his expenses quickly eat it up.
That’s why Mr. Pearson recently took a part-time job at a nearby 7-Eleven, where he earns $12 an hour. That helps keep the fridge stocked, he said.
“It’s tight,” Mr. Pearson said. “But I can make it.”