Student loan forgiveness options for senior citizens entering retirement

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Stanley tate

Student Loan Lawyer

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Student loan debt is not just a problem for Millenials.

Older Americans in their 50s, 60s and 70s owe over $86 billion in student debt.

Many of them are paying a mountain of student debt. They're paying back their loans andthe loans they borrowed or cosigned for on behalf of their children.

Older borrowers will likely be paying the student loans until they die. There's simply no way for these seniors to eliminate their remaining debt burden from their student loans.

Because of that, your focus needs to be on living the best life you can until you leave this earth (or the law changes).

Here's what you need to know about managing your student loan debt as you near retirement.

What happens to student loans when you retire?

Nothing happens to student loans when you retire. You will still owe your federal student loans.  They're not automatically forgiven because you retire. Similarly, you will still owe your private student loans. They're also not forgiven because you retire.

Federal student loans do, however, allow you make monthly payments based on your income, the number of people living with you that you support, and your student loan balance.

So when you retire and your income lowers, your monthly payments can be lowered.

Private student loans don't offer similar repayment plans. As a result, you're forced to pay what the private lender demands or look into refinancing the loans for a lower interest rate.

Will President Biden forgive student loans based for borrowers ages 50+

Earlier in 2021, President Joe Biden directed the Department of Education Secretary to explore whether the president had the power to forgive student loans via executive order. The Ed Secretary has not yet provided his answer.

As it stands, it's unlikely that President Biden will:

  • forgive some or all of our federal student loan debt (private student loan debt likely won't be forgiven) and
  • base loan forgiveness on a borrower's age.

It's more likely that any loan forgiveness the Biden Administration moves forward with will be limited to low-income borrowers. They'll likely look to your gross income for the past tax year to determine your income.

Are student loans written off at 65 or a certain age?

In America, neither federal nor private student loans are not written off at 65 or at a certain age.

Other countries like England, Ireland, Scotland, etc., write off student loans after 25 years of payment or when you're 65.

If you're near 65 or older and you're struggling with your student loans, bankruptcy may be an option.

Click here to schedule a free call to discuss filing student loan bankruptcy

Student loan forgiveness programs for senior citizens

There are no student loan forgiveness programs specifically for senior citizens.

Elderly student loan borrowers with federal student loan debt are eligible for the same loan forgiveness programs as other borrowers.

The 2 main loan forgiveness programs seniors should explore are:

  1. Public Service Loan Forgiveness
  2. Income-Driven Repayment plan forgiveness

Public Service Loan Forgiveness Program

The PSLF Program will forgive the remaining balance due on your Direct Loans if you work for the government or a nonprofit organization.

You do not qualify if you used to work for the government or nonprofit. You must still be working in public service while you work towards getting your loans forgiven. So if you've already retired, this program isn't for you.

IDR Plan Forgiveness

Each of the IDR Plans offer loan forgiveness after you make the required number of monthly payments.

Income Driven Repayment Plans:

  • Revised Pay As You Earn Plan (REPAYE)
  • Pay As You Earn Plan (PAYE)
  • Income-Based Repayment Plan (IBR)
  • Income-Contingent Repayment Plan (ICR)

If you borrowed federal student loans solely for undergraduate studies, your loans can be forgiven after 240 monthly payments.

If you borrowed federal loans for graduate school, your loans can be forgiven after 300 monthly payment.

Loans eligible for IDR Plan Forgiveness:

  • Direct Loans
  • Federal Family Education Loans (FFEL)
  • Federal Perkins Loans (if you consolidate)
  • Parent Plus Loans
  • Grad Plus Loans
  • Federal Stafford Loans

Private student loan forgiveness for seniors

Private lenders typically don't offer loan forgiveness to seniors, grandparents, etc. Because of that, your best bet to deal with private student loans is to contact the loan servicer to see what payment plans they have available.

Ask the representative about the circumstances in which they'll remove you as a cosigner.

Taxes and loan forgiveness

Suppose you work full-time for the government or a non-profit and get your loans forgiven under the PSLF program. In that case, the loan balance is forgiven won't be considered taxable income.

The same may not be true if you get a Total and Permanent Disability Discharge: the some forgiveness isn't taxable income.

But if you get your loans forgiven under an income-driven repayment plan, then you may owe taxes at the end of your repayment term.

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.

The federal government can take your Social Security benefits or start a wage garnishment only if you're in default.

So keep making your student loan payments each month.

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.

The repayment options available to you depend on the type of federal loans you borrowed.

For instance, Parent Plus Loans can be repaid under the income-contingent repayment (ICR) plan.

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 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.

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I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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