Student loan debt is not just a problem for Millenials.
Older Americans over 60 owe over $86 billion in student debt.
Many of them are paying a mountain of student debt as they’re not only paying back their loans, but also the loans they borrowed or cosigned for on behalf of their children.
They’ll likely be paying the student loans until they die.
Here’s what you need to know about managing your student loan debt as you near retirement.
Student Loan Forgiveness Programs For Senior Citizens
There are no student loan forgiveness programs specifically for senior citizens.
Elderly student loan borrowers are eligible for the same loan forgiveness programs as other borrowers.
The 3 main loan forgiveness programs seniors should explore are:
- Public Service Loan Forgiveness
- Total and Permanent Disability
- Income-Driven Repayment plan forgiveness
Those programs apply only to federal student loan debt.
If you owe private student loans or are a cosigner for private loans, there are no loan forgiveness programs. Because of that, your best bet to deal with your private student loans is to contact the loan servicer to see what payment plans they have available.
You may even be able to get removed as a cosigner.
Taxes and Loan forgiveness
If you work full-time for the government or a non-profit and get your loans forgiven under the PSLF program, the loan balance forgiven won’t be considered taxable income.
The same is true if you get a Total and Permanent Disability Discharge: the forgiven amount isn’t taxable income.
But if you get your loans forgiven under an
Student Loan Debt and Social Security
So long as you keep your federal student loans on a repayment plan and out of default, you need not worry about losing your Social Security benefits.
Read Full Article: Can Social Security Be Garnished for Student Loans
The federal government can take your Social Security benefits or start a wage garnishment only if you’re in default.
How to Lower Monthly Payments on Student Debt
As you near retirement, you worry more about rising health care costs, personal finances, and what you’re going to do about your student debt and future loan payments.
Thankfully, your federal loans offer student loan repayment options based on your income.
Read Full Article: A Comprehensive Guide to Repayment Options for Federal Student Loans
The repayment options available to you depend on the type of federal loans you borrowed.
Other loans, like the Direct Loans, including Direct Consolidation Loans, may be repaid under the Revised Pay As You Earn (REPAYE) and the Pay As You Earn (PAYE) plans among others.
And still, other loans, like loans made under the FFEL loan program can be repaid under the income-based repayment (IBR) plan.
The Bottom Line
News reporting about seniors and retirees struggling with student loan debt is scary. While student loans can lead to some bad things happening to your personal finances, those bad things only happen if you default on your loans.
So long as you keep your loans out of default and on an affordable repayment plan or deferment, you should have peace from your student loans in your golden years.