Dealing with Student Loan Debt in Retirement

A senior student hdeading back to campus.

Millions of workers are entering retirement on shaky ground—and rising student loan debt is a leading factor. According to statistics analyzed through September 2021 by the U.S. Department of Education, roughly 6.1 million borrowers over 50 are still paying student loans, and one million of them have loans over $100,000. 

In the last 30 years, the cost of tuition and related fees alone at four-year public schools jumped 178% to $10,560. Those same costs at four-year private schools increased 102% to $37,650, according to the College Board.  

The student debt crisis, which has doubled since 2010 to nearly $2 trillion, is affecting older adults at an alarming rate. Over 100,000 Americans annually have their Social Security benefits garnished to pay student loan debt, according to this Government Accountability Office report.    

“Student loan debt in retirement is a growing problem,” said Robert Farrington, a finance and loan expert in San Diego. “As a result, it can have a profound impact on retirement planning, especially when most loan forgiveness programs require employment.” 

Refinancing Suited for Some 

While retirees have several options to tackle student debt, refinancing private loans might be the best option for borrowers on more solid financial footing, those eager to pay off loans, or those with higher interest rate loans, according to former banker and financial analyst Steve Wilson, founder of, a personal finance site. 

There is a caveat, though, he cautions. “Refinancing private debts lowers interest rates. But the complete amount owed must be repaid, with very little possibility of forgiveness,” said Wilson.

Repayment Plans Based on Income 

If you have federal loans and a modest retirement pension, shifting to an income-driven repayment plan can reduce monthly payments to a proportion of your retirement income. Plus, these loans are eligible for forgiveness after 20 years of payments, according to certified financial planner Cameron Church of Durham, N.C. 

“The last couple of years when payments have paused due to Covid also count towards those 20 years,” Church says. 

These plans can be particularly attractive for millions of retirees who rely on Social Security or a fixed income since they “keep your monthly expense to a respectable percentage of your earnings,” explains Jeff Mains, CEO of Champion Leadership Group LLC, a software consultancy. 

If you have high loan balances, consider an income-driven repayment plan over 20 years, suggests Michael Ryan, a financial planner and coach for 30 years. 

“Most federal programs allow this, and if your income is low enough, your payment may be zero,” he said. 

Some borrowers on income-driven plans may also qualify for government waivers under the Public Service Loan Forgiveness plan and Temporary Expanded Public Service Loan Forgiveness plan. For eligibility, borrowers must have direct loans, worked for the government or nonprofit, and made ten years’ worth of payments, among other stipulations. 

Tapping Into Home Equity 

Another option to minimize student debt is utilizing a home equity conversion mortgage, or reverse mortgage, according to loan expert Mila Garcia. 

Reverse mortgages, available to those 62 years or older, allow a portion of home equity to convert into cash. 

“These mortgages can allow you to draw funds from your home’s equity that you can essentially use for anything, including paying off student loan debt,” said Garcia,  

“The benefit of this option is that a reverse mortgage doesn’t need to be repaid until the borrower either moves or passes away,” she adds. “At which point, the sale of the home can satisfy the reverse mortgage debt.” 

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