Approximately 3.5 million Americans age 60 and older hold more than $125 billion in student loans. (iStock)
Democratic lawmakers said in a letter that millions of older Americans at risk of defaulting on student loan payments could lose some of their Social Security benefits, and Joe Biden He said in a letter calling on the presidential administration to take action.
Sens. Elizabeth Warren, D-Mass., and Ron Wyden, D-Ore., are among several senators who wrote: To President Joe Biden Learn about the risks student loan borrowers 65 and older face if they default on their payments. Approximately 3.5 million Americans over the age of 60 have more than $125 billion in student loans, according to a 2023 study. report That’s according to New America, a think tank cited by lawmakers. Nearly 40% of federal loan borrowers aged 65 and older default on their loans.
Social Security recipients risk losing up to 15% of their monthly benefits to repay outstanding loans under the Financial Offset Program (TOP). TOP collects past due (delinquent) debts (such as child support) that people owe to state and federal agencies. Lawmakers are urging Biden to consider ending the practice of garnishing Social Security benefits to collect student loan debt.
“It is estimated that when a borrower is in collections, their Social Security benefits are reduced by an average of $2,500 per year,” the lawmakers wrote. “This could be devastating for people who rely on Social Security as their main source of income.”
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Income-based repayment plans are also an option.
While no federal student loan forgiveness programs specifically target seniors, Biden’s Savings for Valuable Education (SAVE) plan lowers borrowers’ monthly payments to $0, reducing monthly costs. That could cut it in half, potentially saving people who pay at least $1,000 a year. This new IDR plan was announced after the Supreme Court struck down Biden’s student loan forgiveness plan.
More than $136 billion in student loans have been forgiven for more than 3.7 million Americans under the Biden administration.
The White House said the new forgiveness block will affect borrowers such as teachers, nurses, firefighters and other individuals who earned forgiveness after 10 years of public service. statement. The latest announcement will forgive up to $5 billion in student loans, bringing the total number of Americans with debt forgiveness to more than 3.7 million Americans.
Starting in February, the following borrowers will Minimum 10 year payment Those who initially borrowed $12,000 or less for college funds had their remaining debt wiped out as long as they were enrolled in the SAVE plan. As of early January, 6.9 million borrowers had already enrolled in SAVE plans, and more than 3.5 million had received at least a loan. $130 billion in student loan relief.
If you’re struggling with private student loan debt, you may want to consider refinancing to a lower interest rate. Visit Credible to speak with a student loan expert and get your questions answered.
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College debt hinders retirement savings
Student loan payments are also hindering some Americans, especially those with higher salaries, from building retirement savings, according to a report. report By the Employee Benefits Research Institute (EBRI).
Americans who pay student loans have lower contribution rates and lower total balances in their 401(k) accounts than Americans who don’t pay student loans.
The savings gap is most pronounced among people earning more than $55,000 a year. According to the report, the average savings rate for high-income people with student loans was 6.1%, compared to 7.3% for people with the same income but no student loan payments.
Americans with incomes of less than $55,000 in student loans contributed a lower rate to their retirement savings at 5.3%, compared to the 5.7% rate paid by people earning the same income without additional debt. 31.6% of employees increased their 401(k) contributions when they were able to stop making student loan payments.
If student loans are preventing you from maximizing your savings for retirement, you may want to consider consolidating your private loans into one with a lower interest rate. Visit Credible to speak with a student loan refinance expert to find out if this option is right for you.
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