Not to be mean to anyone but most of us aren't going to pay them, it's gonna be taken with us to our graves, just the truth...
Joe needs to accept the fact, especially with less married folks and more independent minded people we trying to live over paying this. He needs to face this reality.
I feel you and do what's best for your situation. Just warning people you don't want to be like this
3 Million Americans Over 60 Are Stuck With Student Loans. They Owe a Total of $86 Million
Thousands are having their Social Security checks garnished. Don't let this happen to you.
BY
MINDA ZETLIN, CO-AUTHOR, THE GEEK GAP
@MINDAZETLIN
Getty Images
When you think ahead to retirement, you may look forward to relaxing days in some sunny location, perhaps near a beach or a golf course. You may think how nice it will be not to worry about getting to work on time. But for many people, being over 60 and in or near retirement hasn't saved them from a problem that often plagues younger people--student debt.
CBS News
reports that 3 million Americans over the age of 60 still have student debt. And the
Wall Street Journal reports that in 2017, their average debt was $33,800, up 44 percent from 2010. And more than 40,000 people over 65 are having their Social Security payments, tax refunds, or other government payments garnished because they aren't paying their student loans. That number has more than tripled in the last decade.
Graduating seniors at Morehouse College got a huge surprise on Sunday when billionaire commencement speaker
Robert F. Smith announced he would pay off student loans for the entire graduating class of nearly 400. For everyone else, student debt is a national crisis with 44.7 million Americans--that's one out of every five of us--burdened by student loans. In all, we owe $1.6 trillion on these loans.
Millennials find student debt disheartening--and many are holding off buying homes or starting families because of it. Still, most expect to be done paying by the time they reach retirement. Seniors facing $30,000 or more in student loans have fewer options.
People who are still struggling with student debt in their 60s got there one of three ways. In some cases, they have very longstanding loans which they've had trouble paying off over the years. CBS News
interviewed 76-year-old Seraphina Galante, who says she has 19-year-old student debt. The payments have been reduced in accordance with her income. That sounds like a good thing, but her current lower payments aren't even enough to cover the interest on her loan which means that even as she keeps paying her monthly bill, the total she owes is going up instead of down. She says she'll die with that debt still unpaid.
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In other cases, seniors who at some time in midlife went back to school so as to broaden their skills or change careers took out loans for that further education and are now struggling to pay it back in their older years. But the majority of seniors with student debt took it on to help their children go to college. Lenders increasingly insist on having parents co-sign student loans. And loan amounts to students are capped while amounts to parents are not, which means some parents wind up taking on debt to fill in the gap.
How to avoid having student debt ruin your retirement years.
Many parents are willing to do almost anything for their children, up to and including putting their own retirement at risk. That makes sense, but financial advisors suggest
thinking carefully, and realistically, about how much debt you can afford to take on for your children's education, and how to fit that debt into your life. This may mean sticking to a tighter budget, cutting back on dining out or taking more modest vacations. It could mean planning to take on a reverse mortgage, or extra work during your off hours to boost your income. Whichever the case, make sure you're up to it, and if you decide to co-sign a loan, make sure you're financially prepared to pay the entire loan if needed.
Financial advisors suggest borrowing no more than your annual salary, a sum you should be able to pay back within 10 years. If you plan to retire in less than 10 years, adjust the maximum downward accordingly. And if your income is below $45,000 a year, consider carefully whether you can afford to take on student debt at all.
Once you have the debt, don't default on it, if you can possibly help it. If you're having trouble making payments, find out if your loan is eligible for income-based repayments. You may be able to negotiate lower payments by extending the life of the loan or by consolidating debt.
Whatever you do, make sure you know your rights. Some seniors report intimidating and unhelpful debt collectors for student loans. And don't hesitate to get legal help, especially if your Social Security or other government payments are being withheld. Some seniors, especially with lower incomes have been able to stop that from happening with legal representation.
MAY 22, 2019
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Heading Into Retirement With Student Loans
Before you sign or co-sign for a loan, make sure you know the dangers
By
ANDREW BLOOMENTHAL
Updated March 16, 2021
Fact checked by
SKYLAR CLARINE
According to the
Consumer Financial Protection Bureau (CFPB), the number of student loan borrowers age 60 and older climbed at least 20% between 2012 and 2017. Furthermore, more than 75% of states saw at least a 50% uptick in outstanding student loan debt.1 Taken together, these two figures suggest a disturbing trend that could mean economic hardship for millions of older Americans in the years ahead if they're stuck with loan repayment after retirement.
KEY TAKEAWAYS
- The number of American student loan borrowers over age 60 is on the rise.
- Most older people with student debt took out or co-signed loans for people other than themselves, typically a child or grandchild.
- Before co-signing a loan, people should be aware that they will have to make the payments if the other borrower doesn't.
Why It Happens
The vast majority of older adults with
student loan debt did not take out the loans for their own higher education. The CFPB report found that 73% obtained or co-signed loans on behalf of a child or a grandchild, while just 27% said they took out loans for themselves or their spouses.2
Co-signers of loans can find themselves in a difficult situation if the loan recipients fail to honor the agreed-upon payment schedules. By co-signing, they have put themselves on the hook for payments, just as if the loan had been theirs alone.3
Student Loans and Social Security
While up to 15% of your Social Security payments can be garnished to repay a student loan debt, your monthly benefit cannot sink below $750.4 Furthermore, the garnishment cannot occur until two years after you default on a loan, giving you ample time to contact the loan servicer to modify the repayment plan.
Disadvantages of Loan Repayment After Retirement
Since most student loan debt cannot be eradicated by
filing for bankruptcy protection (it is possible in some rare cases), pre-retirees who owe balances often face some or all of the following ramifications5
- They’re forced to work beyond the traditional retirement age. Their Social Security benefits and other retirement inncome may not be adequate to cover their living expenses plus the loan payment.
- They sacrifice retirement savings. According to a study by the Association of Young Americans (AYA) and the AARP, 31% of baby boomers claim that loan debt has either hindered their retirement saving efforts or caused them to prematurely dip into their nest egg.66
- They delay their healthcare. Also according to the AYA/AARP study, student loan debt causes approximately 9% of seniors to put off seeking medical treatment.6
- They experience credit issues. According to Credit Sesame, older adults with at least $40,000 in student debt can struggle to obtain new loans they need to finance home repairs, purchase cars, or cover other big expenses. The AYA/AARP study also found that lingering student loan debt caused 32% to put off buying homes.6
- They're unable to help their families. More than 25% of boomers claim student loan debt prevented them from extending financial helping hands to loved ones in need.6
- Their Social Security benefits are garnished. The American Seniors Association reports that retirees who struggle to pay back their federal student loans in a timely manner may discover talenders have garnished a portion of their Social Security benefits or part of their tax refunds7
Having too much student loan debt can make it difficult to get a loan for other purposes, such as buying a car.
How to Minimize Student Loan Difficulties
Fortunately, there are some constructive steps you can take both before and after you take out or co-sign for a student loan.
Hold Honest Discussions Before You Borrow
Before co-signing for a loan, talk with your co-borrower to determine how much you'll need to borrow and agree on a realistic timetable for making payments. Discuss how scholarships, less expensive colleges, or other options might ease the debt burden.
Prepare a Contingency Plan
Before you commit, make sure you can afford to cover the loan payments yourself if your co-borrower is unable to. If other family members offer a safety net, see if they'll put that promise in writing, just in case they forget.
Monitor the Loan
After you borrow, be sure the loan servicer furnishes regular statements that show the balance due, payments made, the interest rate, and the payoff date. File a complaint with the CFPB if you do not receive this information on a timely basis or if you’re unduly bombarded with harassing calls or letters.8
Know Your Repayment Options
Deferment and
forbearance programs can let you temporarily stop making payments if you experience hard times, such as difficulty feeding your family or paying other household bills.
Consolidating multiple student loans may result in smaller payments.
There are also
other repayment options that might help, including Income-Based Repayment (IBR), Income-Contingent Repayment (ICR),
Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). Some programs forgive an existing balance after 20 years, or if you pass away.
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At 69, She's Still Paying Off $12,000 of Student Debt
WEEKLY ARTICLE
Nancy Beijersbergen / Shutterstock.com
By
Shannon Najmabadi
Oct. 24, 2019
This article originally appeared in The Texas Tribune.
AMARILLO—If 69-year-old Lynda Sue Costley wants to shower, she has to go to a friend’s house. Her trailer, on a gravelly road outside Amarillo, hasn’t had running water since 2014—when her husband died from cancer. She spent the little savings she had on his medical care, she said, and hasn’t repaired the burst pipe.
Costley works part time at a food bank, making $7.25 an hour, and said she stretches every dollar she has. But every month, she receives a letter in the mail saying the federal government is withholding $134 from her Social Security checks—the equivalent of 18 hours of work.
Like death and taxes, Costley may be facing another certainty in life: her student loans.
Although she attended college decades ago and made payments when she could, Costley’s debt has gone into default, swollen with accrued interest and been turned over to a collection company. She’s had her wages garnished and her income tax refunds withheld. Nearing 70, she still owes nearly $12,000 for classes she attended in the 1980s and 1990s—and her balance continues to be padded by interest and the debt collector’s costs.
“I know I’ve got to pay it back; it needs to be paid back,” said Costley. “When I have the money, I will.”
She’s not alone.
Typically associated with millennials, the specter of student loan debt hangs over potentially thousands of retirement-age Texans, like Costley. Older Americans—ages 65 and over—were the fastest-growing demographic of student loan holders, according to a government
report from 2016, and the most likely to be in default.
Some returned to school midway through their careers. Others took out loans for their
children.
Although the increasing cost of college has led Americans to carry more student debt than before, older borrowers may have been particularly
affected by changes to loan terms. Unlike students, parents face no lifetime limit on how much they can take out in federal loans, and private lenders, like banks, have increasingly
required that a student’s loans be co-signed by someone with good credit. The result: Older adults are not just paying off loans for themselves, but may be drowning under debt they’re carrying for their
children.
More flexible repayment options, like income-based plans, also were not available to federal student loan holders before the 1990s. Costley falls into that category.
She got a drafting degree from Amarillo College in the 1980s and returned a decade later to learn AutoCAD, a design software for architects. She dropped out.
Costley didn’t enter the field she studied—she blamed an oil slump for a lack of jobs—but she’s worked virtually all her adult life, at Walmart and Office Depot, at food establishments and hotels. She married and divorced twice before meeting Jerry, a farmer 12 years her senior, and still lives in the white trailer they shared. Money was always tight, but “we had each other,” she says now. “It was enough.”
It wasn’t until he died that the letters started coming, Costley said. First it was notice that her federal tax refund would be used to pay down her student loan debt. Then it was letters saying $134 had been withheld from her monthly Social Security payment, leaving her with about $760.
She’s not the only one in this situation: 173,000 people in the United States had part of their Social Security retirement, survivor or disability benefits withheld in 2015—38,249 of them 65 and older, according to a
report authored by the nonpartisan Government Accountability Office. For many, the withholdings went to paying off interest or fees and not to reducing the principal of the loans.
Records show Costley paid at least $1,600 in interest and more than $550 in government fees between April 2017 and September 2019. About 30% of the amount withheld from her Social Security checks or wages during that time went to interest and 10% to fees. A recent statement Costley received from her debt collector shows she owed $1,817 in collection costs and $40 in interest as of late September, and the amounts continually build.
An Education Department spokesperson said a 1996 debt collection act requires the agency to refer defaulted student loans for "offset," the
practice of diverting Social Security payments or tax refunds to repay government debts. The department will first give borrowers a 65-day warning and tell them they can avoid offset by entering into a "reasonable and affordable" repayment plan or proving that their debt is unenforceable.
Costley’s debt collection company did not respond to requests for comment.
Compelled collection
Borrowers may be beckoned by the prospect of economic advancement. But student loans can have a devastating effect on those who default—destroying their credit or landing them in the crosshairs of a debt collector or in court. It can even threaten their housing.
Joanna Darcus, an attorney for the National Consumer Law Center, said homeowners subject to Social Security offsets may be unable to modify their mortgages—a process that can forestall eviction or foreclosure—due to the loss of income. She said she’s also seen bad credit from student loans hurt borrowers’ prospects for getting affordable or subsidized senior housing.
“The federal government's powers to collect student loan debt are very strong,” Darcus said, “stronger than the powers that the government has or employs to collect other types of government debt.”
The government can withhold federal income tax refunds and garnish up to 15% of a borrower’s take-home pay or Social Security benefits. The benefits cannot drop below $750 a month, a threshold set in the 1990s that is now
below the federal poverty level. Fees are also charged each time a tax refund or Social Security check is offset.
Legislation has been introduced in Congress to eliminate Social Security offsets for student loan debt or to tie the amount withheld to inflation. Those bills have not passed—and this year, student loan advocates and lawyers say they noticed an uptick in how aggressively the government is going after debtors’ social security benefits.
The Education Department spokesperson said the agency redesigned its processes related to offset last year—to "fully comply" with the 1996 debt collection act—and that led to a significant increase in the number of borrowers subject to the withholdings.
Americans hold some $1.5 trillion worth of college debt, most concentrated in the hands of those under 50 years old. But the ranks of older borrowers, 60 and older, swelled from 700,000 in 2005 to 2.8 million people in 2018, and their debt load went from $8.2 billion to $66.7 billion, an eightfold increase, according to data from the Federal Reserve Bank of New York Consumer Credit Panel and Equifax.
In 2017, about 222,144 Texans ages 60 and over had student loan debt, carrying a median load of $15,754, per a
Consumer Financial Protection Bureau report. Eighteen percent of them were delinquent that year—but it’s unclear how many went into default or had their Social Security benefits withheld. Government data shows the Education Department referred 10,813,852 debtors to the Treasury Department during the last decade, but it doesn't specify if those people ultimately had payments garnished.
The nonprofit Trellis Company, which was the state’s guarantor for a federal loan program that ended in 2010, declined to provide statistics about how many older borrowers were in its portfolio or the number of them in default. A spokesperson, Bryan Gilbert, explained the organization’s data would not be helpful—and could actually be misleading—given the small size of its loan portfolio relative to the number of retirement-age borrowers in Texas and across the country.
“It just keeps building"
There are ways to have federal student loan debt wiped away. A borrower can submit documentation that shows he or she is “
totally and permanently disabled” and request a discharge. The Education Department has steered borrowers receiving Social Security disability benefits to this option
since 2016, and in August, President Donald Trump signed an
executive order automatically forgiving the debt of permanently disabled veterans.
But that avenue isn’t available to able-bodied borrowers, like Costley. Even bankruptcy—which can erase credit card and medical debt—is unlikely to provide a financial life raft for her; the bar to discharge student loans is far higher than that needed for consumer debt.
“It doesn’t compare,” said bankruptcy attorney Steven Palmer. “This is the one main type of consumer debt that … you just can’t get out of." Taxes, medical debt, mortgages, government-backed Small Business Administration loans can all be discharged. "It’s pretty much absolutely everything except student loans," he said.
It’s particularly difficult in Texas. In the Fifth Circuit, which considers cases from federal courts in Texas, debtors would virtually need to show total incapacity to get relief. As recently as
July, a court rejected an appeal from a Texan over age 60 with a degenerative nerve condition and nearly $8,000 in student loan debt.
Other courts—including those overseeing Massachusetts and Maine—have used a more charitable interpretation of the federal statute, which says student debt can be discharged if repayment imposes an “undue hardship.”
“Today you can file a bankruptcy, be in just utter, destitute circumstances and still fail” the test required to discharge student loans, said Palmer, an attorney at the Curtis, Casteel and Palmer law group in Washington.
Sapna Aiyer, an attorney with Lone Star Legal Aid, also said it's exceptionally hard to meet the Fifth Circuit's undue hardship test.
"The only cases I’ve seen where that standard actually passes is where the debtor is just going to get sicker and sicker, like [with] Parkinson’s or cancer," Aiyer said.
Legislation filed in Congress would make it easier to discharge student debt in bankruptcy, but it hasn’t progressed.
Student loan holders can also apply for hardship waivers that can reduce how much of their Social Security benefits are withheld or stop the payments from being offset altogether.
Costley hadn’t heard about the hardship waiver and has entered into a payment plan with her debt collector. She said she’s responsible for her loans and doesn’t mind the government taking her tax refunds and Social Security benefits to pay them back.
But Costley does puzzle over why her loan balance is so high, given the years of garnishments and sporadic payments. “I really thought I would have paid more of it,” she said.
The government has recouped some $5,000 from Costley since April 2017, largely through garnishing her wages and withholding her income taxes and Social Security pay. It’s hard to determine how much Costley has paid in total; records show she consolidated her loans, but she doesn’t remember doing so and didn’t retain documentation about the original amount she took out. A March 1996 document, signed as she returned to college, shows she had a loan balance of $7,168.
At one point in the mid-1980s, Costley said she was close to paying the debt off in full. But instead, she replaced her car — she said it kept dying, including once in the middle of an intersection while her son was in the front seat.
“I was dumb,” she says now, reflecting on the decision. “I should have paid my loan off—but then I wouldn’t have been able to [get to] work.”
Asked what advice she would give to college students today, Costley said, “Stick with those payments and get it paid off as quick as you can. All it’s going to do is keep building.
“It seems like the more you pay, it just keeps building,” she said.
