Question: âI’m 65 and I have $ 80,000 in student loans that prevent me from being able to retire. I just found out that my student loan provider is Navient, who is discontinuing their services. And I always hear about forgiveness programs. Please let me know if there is anything I can do.
Reply: Many of us think of the student loan crisis as a problem for young people, but in fact, about 9 million Americans aged 50 and over are in student loan debt. In addition, the amount of debt of this group is growing faster than other age groups, according to data from the Department of Education. And experts say postponing retirement due to debt is a common problem. In short, your problem affects a lot of people. Here’s What Experts Say You Should Do, Consider Refinancing – some student loan refinancing rates now start at less than 2% for some borrowers – when the loan is canceled.
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First of all, note that the service of transfers can happen at any time, but right now there is a lot of flow in the system, says Anna Helhoski, student loans expert at NerdWallet. âNavient is withdrawing from loan management, but all the loans in his portfolio are transferred to a manager called Maximus. According to the Education Department, you won’t lose access to your connection, your account data, or your payment history when this happens, âsays Helhoski. Adds Andrew Pentis, Education Financing Expert and Certified Student Loan Advisor at Student Loan Hero: âMake sure Navient has your most up-to-date contact information. Just because the service agent changes doesn’t mean you don’t suddenly have to pay off all the debts – nothing changes about what you owe.
If borrowers want their federal loans canceled, it is possible, but it might not be that easy. Improvements are made to existing forgiveness programs, such as termination for public service or if a student is the victim of fraud at his school, but Helhoski says, “Don’t count on a blanket forgiveness.” Pentis adds, âForgiveness or relief has not yet been targeted for older people or parents in debt on behalf of their children – although these appear to be among the next cohorts when it comes to help. If you’re employed by the government or a non-profit organization, a government loan forgiveness program can write off the remaining balance on direct loans after you’ve made 120 qualifying monthly payments. Likewise, teachers who have taught full-time for five consecutive academic years in certain schools may benefit from a loan forgiveness of up to $ 17,500. StudentAid.gov provides an even more in-depth review of these and various other loan cancellation and discharge programs that may relieve you of your student loan obligation.
If you don’t qualify for remission, you will need to find a way to pay off that debt. Is there a way to reduce your expenses or increase your income so that you can pay off loans faster? If debt seems to be a big burden each month, “work with your new service agent as soon as possible to confirm that you are on the right repayment plan for your finances,” says Pentis. Helhoski recommends determining whether you might qualify for an income-based repayment plan that ties your payments to what you earn. âStaying up to date could mean signing up for an income-tested refund which will set your payments at 20% of your discretionary income and extend the refund for 25 years, after which the remainder of the balance will be forfeited,â Helhoski explains. It can mean delaying retirement, but defaulting on student loans can lead to the garnishment of your Social Security payments, credit damage, and fees.
Another option could be refinancing. With some student loan rates now hit all-time highs, refinancing is an option that can save a lot of money, although it is important to note that there are risks, as you can see in our guide here. And unlike mortgage refinancings, student loan refusals usually don’t come with any set-up or application fees. To get the lowest possible rates on refinancing, experts advise improving your credit, getting your finances in order, applying with a co-signer, getting quotes from multiple lenders, shortening the term of your loan and how to get more discounts on your rate.