Find Solutions for Older Americans With Student Loan Debt

Much has been written of late about the dramatic rise in older Americans holding college debt, either for themselves or their children. What hasn't gotten nearly as much attention, however, are the practical solutions this population can use to take control of the debt.

Here are some helpful tips on retiring student loans, even if you're in or approaching retirement yourself:

If the federal student loans you're carrying were for your own education and you're having a hard time making the payment on a fixed income, but the loans are still in good standing -- so, not in default -- check out income-based repayment.

Income-driven repayment plans are available to all borrowers, but there are some new options that older student loan holders may not be familiar with. And it never hurts to revisit your eligibility and payment amounts.
If you're eligible, your monthly student loan payment will be set at no more than 15 percent of your income. Use the U.S. Department of Education's Repayment Estimator to explore eligibility for income-based repayment plans and possible payment amounts.

After 25 years of payments on this plan, any remaining balance is forgiven, and that is reduced to 10 years if you are currently employed in public service. You must recertify your eligibility for this plan each year.

[Find out four creative ways to reduce your student loan debt.]

Note that there is a newer version of income-based repayment called Pay As You Earn that's slightly more generous, but is only available for loans taken out in recent years . If you have older Federal Family Education Loans, you're not eligible for these plans, but you can use a similar plan called income-sensitive repayment.

With income-sensitive repayment, you can choose a monthly payment amount between 4 percent and 25 percent of your monthly income but can only use the plan for five years. Another option is to consolidate your existing Federal Family Education Loans into a new federal direct consolidation loan so that you can take advantage of income-based repayment plans.

If you have Parent PLUS loans that you took out for your children, things get a little trickier but there are still options. These loans aren't technically eligible for income-based repayment, but if they are consolidated into the Direct Loan program, they gain eligibility for income-contingent repayment. That makes three different payment plans determined by income -- four if you count Pay As You Earn separately.

Income-contingent repayment bases payment on your income and family size but will usually be higher than payments under income-based repayment. Unfortunately, Parent PLUS loans are never eligible for income-based repayment, but income-contingent repayment should offer some relief.

[Learn about four income-driven student loan repayment plans.]

If your federal student loans are in default, you could be facing garnishment of up to 15 percent of your Social Security benefits. In fact, according to the Government Accountability Office, more than 155,000 Social Security recipients -- including those receiving retirement, survivor and disability benefits -- had their Social Security garnished in 2013 due to student loan debt. Of this group, 36,000 were over the age of 65, a 500 percent increase from the level of 6,000 in 2002.

The good news is that you can take advantage of the options above to reduce the amount being garnished. Your payment could even be as little as zero dollars under certain circumstances. But first, you'll have to get your loans out of default, either through rehabilitation or consolidation.

Senior citizens who are totally and permanently disabled may also want to look into the possibility of having their federal student loans discharged.

It's important to know what to do if your student loans aren't federal. While the bulk of the country's $1.2 trillion in student debt is held by the federal government, there's still approximately $150 billion in private student loans. And often borrowers of private loans, regardless of age, struggle the most because private loans don't come with all the repayment options described above.

[Test your knowledge with this quiz on student loan repayment.]

Private loans also often require a co-signer, so many older Americans have cosigned these loans for their children and are on the hook if the student can't repay. If you're struggling with private student loan payments, consider consolidating or refinancing your loans.

Some private lenders also recently announced they'll modify private student loans for borrowers that are facing financial hardship. You may also want to talk to your lender about postponing payments, although they may charge you a fee and interest will accrue.

A worst-case scenario is filing bankruptcy. As the Student Loan Ranger has previously written, discharging both federal and private education loans in bankruptcy is incredibly difficult, but not completely impossible.

Paying off student loans at any age isn't easy, but a little information and knowledge about your options can go a long way in offering some relief and peace of mind as you head into the New Year.

Allesandra Lanza is the director of corporate public relations for American Student Assistance. She has nearly 20 years of experience in the student loan industry, and has answered students' questions about their federal loans; conducted on-campus loan counseling sessions for students as they enter and exit school; and written about loan repayment, debt management, budgeting and more. Lanza received a B.S. in journalism from Boston University.