While discussing how student loans can affect credit scores last week, we concentrated on younger people. But you may not be aware that many older Americans may also experience financial stress because of student loans. Some Americans past the age of 60 who have managed to pay down credit cards and mortgage debt still have student loans that continue to eat away at their budgets. Consumerist spoke with a woman who said that she thinks she may still have student loan debt when she is in her 80s because circumstances like divorce and health issues kept her from putting more money towards her student loans.
If you didn’t know, the Department of Education is allowed to take money from Social Security, disability, retirement, or survivor benefits to satisfy a defaulted student loan.
Consumerist reports that according to the Government Accounting Office (GAO):
“From 2002 through 2013, the number of individuals whose Social Security benefits were offset to pay student loan debt increased from about 31,000 to 155,000. Among those 65 and older, the number of individuals whose benefits were offset grew from about 6,000 to about 36,000 over the same period.”
Most of this debt is for loans people took out for themselves (and not for family members) but it isn’t clear whether the loans were from their youth or from going back to school mid-career.
The GAO report indicates that the percentage of today’s seniors who are in financial jeopardy because of student loans is rather small. However, it would make sense for those who are planning to retire in the decades to come to keep in mind that student loan debt needs to be repaid and that getting older does not erase this responsibility.
A Fee-Only financial planner can help remind you that while you are working on your larger financial goals, you still need to pay off your student loans in a timely fashion because you do not want to jeopardize your retirement.