Young professionals are not the only ones bogged down by student loans. A recent report released by the Government Accountability Office (GAO) found that “the total outstanding debt load held by senior grew to $18.2 billion in 2013, up from $2.8 billion in 2005.” In just eight short years, the student loan debt carried by seniors has increased over $15 billion. On top of this, GAO also reported that 155,000 people had their Social Security checks docked last year due to delinquent student loans. Read more here: http://www.washingtonpost.com/news/get-there/wp/2014/09/11/more-seniors-are-carrying-student-loan-debt-into-retirement/
This leaves a pretty bleak financial picture for seniors who are already struggling with lack of retirement funds and rising medical bills.
Forbes magazine recently suggested that there is one often overlooked solution that many seniors are ignoring – apply for one of the federal repayment plans. The repayment plans do not consider checks from Social Security as income. If that is the only income a senior possesses, then the repayment plan protects the seniors Social Security check from being garnished and it also allows the senior to not make payments and still be current on the loan. Read more here: http://www.forbes.com/sites/jasondelisle/2014/09/11/social-security-and-unpaid-student-loans-what-the-feds-wont-tell-you/
Here at McCarthy Law, we know that there is one flaw to Forbes’ advice – if the loan is a private student loan, then the federal repayment plans offer no protection. Many seniors have co-signed their son’s daughters, nieces, nephews, grandchildren’s, etc. private student loan. There is no release from these loans because you cannot bankrupt out of student loans. Yet there is also no income based repayment plan. So, the seniors are on the hook.
If this is your situation, contact a debt settlement attorney who can often negotiate with the private lender to reduce the balance based on hardship and other legal arguments.
Author: Kevin Fallon McCarthy