Q. My wife and I are retired but have student loans from putting our two children through college. We have been diligent in our payments. My wife retired from nursing three years ago but has been called out of retirement as a COVID contact tracer. She has 10 years of repaying student loans. Is there any way she can have her student loans forgiven? Also, I am a retired high school principal with two student loans. One of the loans was $ 79,000 and with no missed payments, we discovered it had ballooned to over $ 105,000. How can that be, and is there any action I can take to contest the loans ballooning like that?
– Paying too much
A. College debt is a huge burden on so many people.
Let’s take your questions one at a time.
First, it seems like you’re talking about some loans for your children, some for your wife and some for you.
On loans that were used for your kids’ educations, you should discuss with them if the repayment is significantly impacting your retirement, said Evan Drury, a chartered financial consultant with US Financial Services in Fairfield.
âWe all want to give our children everything, but we should give what is reasonable and know that there are other solutions to help your children beyond paying for everything out right,â he said. âFor example, you could assist with monthly payments in a way that does not significantly impact your retirement. Remember your children have their entire lives to pay off their loans while you cannot obtain a loan to retire. â
Regardless of who’s name is on the loans, there are a number of factors that could allow a loan to grow over time even if you never missed a payment.
That includes income-driven repayments, Drury said:
âThis pertains to federal income-driven plans which allow borrowers to make payments based upon what they can afford rather than what they owe,â he said. âThe monthly interest on the loan may be higher than the monthly payment. In this case, the total student loan balance could actually increase each month. â
If you’ve ever opted for a deferment or forbearance with regards to your loan, even though you didn’t have to make a payment, the interest is still growing, he said.
âSometimes, private lenders allow borrowers to have a temporary reduction in the amount they are expected to pay each month,â he said. âWhile it might help the borrower in the short-term the interest usually continues to grow.â
You should review your statements and see when and how the balance grew.
âReview your statements or contact your loan provider to determine what caused the loan value to increase, â he said. âOnce that is understood you can better address the situation. It could be something as simple as increasing your payment, but that has yet to be determined at this point. â
Now to your wife’s loan and any possibility of forgiveness.
It’s possible that she could have her student loans forgiven through Public Service Loan Forgiveness (PSLF) if they are Direct Loans forgiven and she qualifies, he said.
She must: Â· Be employed by a US federal, state, local or tribal government or not-for-profit; Â· work full-time for that agency or organization; Â· have direct loans or consolidate other federal student loans into a direct loan; Repay the loans under an income-driven repayment plan, and; make 120 qualifying payments.
Contact your lender to see if her loans may qualify, he said.
âMost of the PSLF qualifying payment rules have been suspended through October 31, 2022. Under this temporary waiver, you may get credit for payments you’ve made on loans that would not normally qualify for PSLF,â Drury said. âThese payments will count even if you didn’t pay the full amount or on time.â
Only payments made after October 1, 2007 can count as qualifying payments, he said.
Nurses with private student loans can consider the Nurse Corps Loan Repayment Program.
Also remember that you may need to pay taxes on loan relief depending on the program, so speak to your tax preparer before you make any decisions.
Email your questions to [email protected].
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly e-newsletter.