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Student Loans Debt Affecting Retirement

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Any type of debt can be painful and have severe consequences. Many Americans are able to recover from typical debts resulting from mortgages, credit cards, and medical bills. Recently a newer type of debt from federal student loans is costing Americans unmanageable side effects that can put retirement and Social Security are risk. 

Recently retirees are experiencing cuts reportedly up to 10% on social security checks each month. This is a result of the Treasury Department taking money to pay for defaulted federal student loans years before.

This group of seniors who hit retirement with student debt is expanding exponentially. The Federal Reserve Bank of New York says people over age 60 are the fastest growing educational loan balances of any age group.

With cumulative student debt of $58 billion in 2014 for Americans 60-year-olds and older, student debt is not expected to go away any time soon.

Loans for retirees are very difficult and can become nearly impossible to pay off. Whereas compared to a new college graduate, there are rising salary incomes expected to help pay off the payments.

Furthermore student loan debts cannot be discharged in bankruptcy except by proving an undue hardship. The result is federal tax refunds and up to 15% of wages and Social Security being garnished.

With enough student loan debt, a Social Security recipient can be forced into poverty.

Luckily there are strides to help new regulations and legislation within the next few year which may relief educational loan borrowers. Since March, the Senate has been making proposals to help make student loans become dischargeable through bankruptcy.

The Department of Education talks of new regulations that may allow all student borrowers to cap payments at 10% of their monthly income.

We at Timothy J. Sierra Attorney at Law would like to state that our blog posts and links, on our web page or any other social media outlet, to any other web pages are not intended for legal advice. We are not responsible for third party website information. If one is in need of legal advice please contact an attorney directly.

Source: Time | Money

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