Taking Student Loans Into Retirement

Going back to school generally sounds like a good idea and a wise career move. Helping the kids get a college education is a burden many parents are willing to bear. Yet, these noble actions are having unintended consequences for many of our nation’s senior citizens. Roughly two million Americans over 60 currently share about $36 billion in student loans. More than 10% of those loans are delinquent, leading to garnished Social Security checks and retirees being forced back to work to cover expenses.

The reasons for taking out these loans in the first place may be sound, but high unemployment rates and low salaries make a college degree less cost-effective. Struggling to find a job and meet monthly payments leads to missed payments, late fees, and defaulting on the loan. The amount owed quickly becomes unmanageable and it can feel like there is no way out. Even filing bankruptcy doesn’t make the debt go away; student loans stay with you.

There are solutions for those who qualify. Several federal programs are aimed at helping struggling debtors to repay their loans; after all, the government wants the money repaid, too! One is Income Based Repayment. It can lower monthly payments based on the borrower’s income and spread them out over a longer period; after 25 years any remaining loan amount is forgiven. Also, if income is below 150% of the poverty line, payments are $0. Because the term of the loan is longer, more interest might be paid over time, so IBR is not a good option for everyone.

Another possible solution is the College Cost Reduction and Access Act.  Debtors who work in public service and make 10 years of on-time payments can have the balance of their loan forgiven. Certain requirements must be met to qualify.

Of course, the best solution is to head off the problem before it starts. There are many scholarships and special programs available, especially for students heading back to school a second time around. It is well worth the effort to seek out and apply for aid before taking on a large debt that may haunt your silver living. A great resource is FinAid – a free website with information on loans, scholarships, and repayment options.

About the author

Amanda Dean

Amanda Dean is an expert in senior care with almost two decades of experience. After graduating from Cornell University with a degree in Human Development, Amanda was selected for the highly coveted role at NYU Langone Medical Center as a Geriatric Case Manager. She then founded and ran the largest independent local senior care advisory in NY for 12. Amanda joined Silver Living as the Senior Editor in 2012.