After a lifetime of service, many hard-working Americans look forward to applying themselves to their hobbies, traveling, or even spending more time with their families during retirement. For some, learning is also a priority, and many older Americans are going back to school or helping their own children out with the cost of education; however, taking out student loans later in life may not be the best decision. If you’re taking out or cosigning student loans in your 50s, 60s or even 70s, it could hurt your retirement.
Student loan debt is one of the largest debts crippling the nation. The U.S. is known, unfortunately, for staggering student loan debt. The Federal Reserve Bank of New York estimates that citizens owe anywhere between $902 billion and $1 trillion, with $864 in federal student loan debt. An increasing portion of that debt belongs to older adults looking to retire or who are retired. Statistics indicate that those who take out loans later in life have a much more difficult time paying them off before their income dries up. Sadly, many are forced to postpone retirement.
Older Americans Struggle to Retire Because of Student Loans
Older Americans are the fastest-growing age group in the student loan market. As they inch closer to retirement, their collective debt continues to soar.
The Consumer Financial Protection Bureau (CFPB) states that 73% of older Americans with student loan debt borrowed for a child or grandchild, or cosigned a loan. Just 27% obtained loans for themselves or their spouses. Cosigning a loan is risky business; if the original signee doesn’t pay the bill, the cosigner remains obligated to pay the outstanding debt as if it were their own. Many who make this sacrifice to enhance the lives of their loved ones do themselves a disservice when the time comes to enter retirement.
6 Consequences of Having Student Loan Debt Later in Life
It’s hard to say “no” to education for oneself or a loved one, but footing the bill for a college degree is a costly decision that hurts the financial futures of older Americans. Approaching retirement with student loan debt can have many dire consequences, unraveling the effort you put into saving and planning for life’s next stages.
- Needing to work past retirement age. Unfortunately, many Americans who have student loan debt later in life struggle to make payments. As interest accrues, many wind up owing much more than they borrowed, keeping them in an endless cycle of paying the interest without touching the original debt. This cycle forces them to keep working well past retirement age just to make ends meet.
- Depleting retirement savings to pay back loans. Those who cannot maintain a full-time job may dip into retirement savings to reduce their student loan debt. After a lifetime of saving for retirement, draining those savings for student loans is difficult to digest. Those who make this decision often find themselves without a more viable option to eliminate their debt.
- Delaying healthcare. According to a study by the AARP, student loan debt was a factor in 9% of seniors postponing medical treatment.
- Being unable to help other family members financially. Many older Americans with student loan debt cannot help other family members who need financial support.
- Having your Social Security check garnished. Some older Americans who can’t pay back their federal loans on time find that lenders have garnished part of their Social Security benefits. Less money for retirement can prevent you from a fulfilling future.
What You Can Do to Reduce Outstanding Student Loan Debt
Not all hope is lost if you’re approaching retirement with outstanding student loan debt. Depending on the type of debt, it may be possible to work with an attorney to reduce your bills. Attorneys with McCarthy Law PLC have extensive experience helping borrowers reduce private student loan debts. There are many options for settling student loan debt, including attempting the negotiations on your own. Yet, when your life savings are at risk, you should trust a professional to negotiate the best deal possible.
There are many advantages to working with a debt settlement lawyer to reduce student loans. McCarthy Law PLC offers free consultations, so there’s no risk involved in learning what your most viable solutions are for private student loan debt. Our firm may be able to take several actions to reduce your burden, including negotiating with lenders, who might not want to negotiate with individuals. We can also match the fees of another debt settlement company if you find one offering lower fees than ours. Call 855-976-5777 or complete our contact form to get started.