Question: I’m 65 and have $220,000 in student debt. I have diabetes and high blood pressure. I am currently working part time. Is there a way to alleviate or erase the debt?
To respond: First, know that there are plenty of borrowers with your level of student debt — about 6% of borrowers have more than $100,000 in debt, according to Brookings — and there are ways to cope with repayment. . You may know that if you have federal student loans, you still have until early May before you have to tackle repayment, thanks to the government’s student loan repayment moratorium. However, if you have private student loans, you will need to negotiate any forbearance with your lender. It’s also possible that if your loans are private, a refinance could save you money (see the lowest rates you might qualify for here); but think twice about refinancing federal loans, as it will deprive you of benefits like forgiveness.
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“Perhaps one of the best ways to manage student debt, at least if it’s federal, is to adopt an income-driven repayment plan. There are currently four different plans, and each will cap your monthly repayment to a set percentage of your disposable income to ensure it’s affordable,” says Michael Kitchen, Senior Editor at Student Loan Hero. Although you should continue to pay as long as you have income, it might at least make it easier to manage the repayment.
Anna Helhoski, student loan expert at NerdWallet, says working part-time, regardless of health or age, can prevent a borrower from receiving what’s called a “total and permanent disability discharge.” “Borrowers who qualify for this form of loan forgiveness are unable to work due to physical or mental impairment. Those with a disability recognized by the Social Security Administration or the Department of Veterans Affairs will have their debt automatically forgiven,” says Helhoski.
In the United States, student loans are not canceled when the borrower reaches age 65, which may explain why one-third of borrowers age 65 and older are in default and half of borrowers age 75 and older are in default. more find themselves in the same boat, according to a report by the Government Accountability Office. With disability release, Mark Kantrowitz, student loan expert and author of How to Apply for More College Financial Aidstates, “Diabetes and high blood pressure are generally not eligible for total and permanent disability release unless they are severe enough to affect the borrower’s ability to work.
If your loans are federal and you worked full-time in an eligible public service job, you should check to see if your loans may be eligible for public service loan forgiveness. “There is a limited PSLF waiver available until October 31, 2022 which allows payments from any repayment plan, late payments and partial payments to be considered for cancellation, provided you complete a form PSLF through the PSLF Helper Tool before the deadline,” Kantrowitz says.
Alternatively, Lisa Weil, Certified Financial Planner at Clarity Northwest Wealth Management, says, “I might suggest if they own their home or have a low balance remaining on a mortgage, explore the possibility of using a reverse mortgage to repay these balances. or consider refinancing this debt at a lower rate to reduce their monthly financial burden.
Remember, if you’re having difficulty making payments due to low or no income, you may qualify for a low or no payment by enrolling in an income-based repayment plan. To see if you qualify, contact your federal student loan officer or visit studentaid.gov for more information.