How Many Seniors Have Student Loan Debt and Where Can They Find Help?September 22, 2021
Having student loans at age 65 or close to it can be incredibly stressful, but it’s also surprisingly common. According to data from the U.S. Department of Education, there are 2.3 million student loan borrowers ages 62 and up, and they carry an average of roughly $37,739 in debt—that’s higher than the average for recent college graduates.
This senior citizen student loan debt can include loans from their own education, but for some, it can also include Parent PLUS Loans that they took out to help a child get through school.
Here’s what you need to know about the unique challenges for seniors and student loan debt and the types of student loan debt relief for seniors that are available.
Why Senior Citizen Student Loan Debt Is a Problem
Student loan debt impacts borrowers of all ages. For many recent college graduates, student loan payments can make it difficult to save for retirement, buy a house, build an emergency fund and more.
But senior citizen student loan debt poses even bigger challenges for the borrowers who hold it. While seniors are generally better established than recent college graduates, they have unique financial needs that people in their 20s and 30s don’t.
The most pressing need can be retirement. While the average retirement age is 62 for most Americans, many seniors have to play catch up with their investments to make that happen. With high student loan payments, it can be difficult to stay on track with retirement contributions.
What’s more, seniors tend to have higher healthcare costs. According to Fidelity, a couple at age 65 should have a whopping $300,000 saved up just to cover healthcare expenses in retirement.
But if you can’t properly save for these costs because you’re burdened by student loan payments, it could have consequences for your finances and your health.
Help for Seniors With Student Loan Debt
If you’re a senior citizen and you’re struggling to get by with your student loan payments, there is help for seniors with student loans available. Here are some options to consider:
- Student loan forgiveness: Student loan forgiveness for senior citizens may be available if you work in public service, for an eligible not-for-profit organization or as a teacher. Learn about the Public Service Loan Forgiveness program and Teacher Loan Forgiveness program to find out if you’re eligible.
- Income-driven repayment plans: If you have federal loans, income-driven repayment plans can provide considerable student loan debt relief for seniors. These plans reduce your monthly payments to a percentage — between 10% and 20% — of your discretionary income. If you have Parent PLUS Loans, your options are limited, but they may still alleviate some of the burden of your monthly payments.
- Transfer the debt to your child: If you borrowed money to help put your child through school, you may be able to refinance your Parent PLUS Loans or private parent loans to your child after they graduate. Some lenders, including ELFI, allow student loan transfers, but keep in mind that your child must agree to take on the debt, and they must qualify to refinance the debt in their name. In some cases, the parent may need to cosign the application for the child to be approved. But in this situation, you’re no longer responsible for making the payments unless your child doesn’t.
- Refinance the debt in your name: Even if you can’t refinance the debt to transfer it to your child, student loan refinancing can still provide help for seniors with student loans. Depending on your current interest rates and financial situation, you may be able to qualify for a lower rate on a refinance loan. What’s more, private lenders offer repayment terms ranging from five to 20 years, so you’ll get a little more flexibility with your term and monthly payment.
If you’re considering refinancing federal student loans in your own name, though, it’s important to note that you’ll lose access to federal benefits, including loan forgiveness programs and income-driven repayment plans. So think carefully about whether you want to take advantage of those features before you refinance with a private lender.
The Bottom Line
Because seniors have certain financial obligations and needs that college graduates typically don’t have to worry about, having a large student loan balance and monthly payment can feel oppressive and insurmountable.
Getting help for seniors with student loans may seem difficult, but there are plenty of options available, even if you didn’t take out the loans for your own education.
The important thing is that you take the time to research your options for student loan debt relief for seniors and choose the path that works best for you.