Nearing Retirement With Student Loan Debt? What You Can Do
Many older adults will struggle with rising costs (health care and otherwise) and not enough savings. Here’s how they can manage lingering student debt.


Student loans have become one of the heaviest financial burdens for Americans. As of this year, student loan borrowers owe a whopping $1.7 trillion in federal and private student loan debt, according to the Federal Reserve. It may seem that student loan debt is most often a problem for younger and middle-aged Americans, but data from the Consumer Financial Protection Bureau says otherwise. It found nearly 40% of borrowers 65 and older have defaulted on their loans.
What’s even more concerning is that for many, age 65 is when people start thinking about claiming Social Security benefits, if they haven’t done so already. This financial burden can add even more pressure on Americans nearing, or in, retirement.
Having enough money to live on for the rest of your life is one of the biggest concerns in retirement. It’s why we spend most, if not all, of our working years saving up for it. When you add rising costs, increased medical treatment and the burden of student loans onto an older adult’s plate, it can become extremely challenging to make ends meet. This has caused many to default on their student loans, which can lead to even more problems, especially if they’re federal loans.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Under the Treasury Offset Program, the federal government can garnish up to 15% of monthly federal benefits for those with outstanding student loans. This includes disability payments, tax refunds and even Social Security benefits. This has caused concern for lawmakers who sent a letter to the White House in March. They’re urging the Biden administration to exempt Social Security benefits from being garnished under the program.
Co-signed student loans can also be an issue
Older adults who are co-signers on student loans for children or grandchildren also need to be careful, especially when it comes to private student loans. The federal government isn’t allowed to garnish a co-signer’s Social Security checks if the borrower doesn’t pay the loan. However, the lender can take you to court in an attempt to collect the amount due on the loan.
This isn’t really an issue for federal student loans, because they typically don’t require a co-signer. A biological or adoptive parent can take a Direct Plus, or parent Plus, loan to help their child pay for college, but if you default on those payments, your Social Security or disability payments could still be garnished. If you’re planning to co-sign or take a loan to help your child pay for college, make sure you understand the terms of the loan and the consequences if payments aren’t made.
If you’re heading into retirement before your student loans are paid off, there are a few options for handling the financial burden. If you have federal loans, it may be worth checking into income-driven repayment plans. These plans determine your monthly payment based on your income. More information on these plans can be found on the Federal Student Aid website.
Another option is to see if you qualify for student loan forgiveness. Depending on your career, your student loans could be forgiven entirely. The Public Service Loan Forgiveness program forgives loans after 120 payments have been made and 10 years of service have been completed. Government workers and teachers are just some of the professions that qualify for this type of forgiveness.
Refinancing could be an option
If you don’t qualify for forgiveness, you might want to consider refinancing your loans. Refinancing may allow you to reduce your interest rate and repayment term, but there are some risks. If you refinance federal student loans into private loans, you’ll lose any borrower protections you had under the federal government.
If none of these options works for you, you can also let your student loans “ride,” meaning you’ll make the lowest monthly payments allowed.
Federal student loans are discharged upon death, so your children will not be responsible for paying them. This is true for most private loans, too, as long as they’re not co-signed.
Daily living expenses need to be taken care of in real time, and sometimes, the best option is to check into an income-driven repayment plan to lower payments or pay the bare minimum required each month.
The burden of student loans can be paralyzing for older adults heading into retirement. If you’re retiring with outstanding loans, be sure you can still afford to make payments. If you can’t, you may need to delay retirement, pick up a side gig for extra income or check into income-driven payment plans and forgiveness. The last thing you need to be concerned with in your golden years is paying off debt from decades ago.
Pat Simasko is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Simasko Law is a separate entity and not affiliated with CoreCap Advisors. The information provided here is not tax, investment or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Patrick M. Simasko is an elder law attorney and financial adviser at Simasko Law and Simasko Financial, specializing in elder law and wealth preservation. He’s also an Elder Law Professor at Michigan State University School of Law. His self-effacing character, style and ability have garnered him prominence and recognition throughout the metro Detroit area as well as the entire state.
-
Stock Market Today: Cautious Investors Let Stocks Drift Lower
Markets weigh encouraging trends for earnings and tariffs against concerning signals from U.S. consumers.
-
A Smart Way to Combat Economic Rollercoasters
Savings With rates on CDs remaining high for now, a CD ladder allows you to maximize your returns with flexibility to your cash when you need it.
-
Time to Spring-Clean Your Finances: A Financial Professional's Four Steps to Tidy Them Up
A midyear review of everything from spending to saving, with adjustments as needed, can set you on track to financial security. Plus, don't forget to check in on your workplace benefits.
-
Why a Law Firm Secretly Recording Client Conversations Is Wrong (and Illegal)
A law firm that has been recording client conversations without the clients' knowledge or permission and has threatened employees if they speak out faces legal and ethical challenges.
-
Donating Complex Assets Doesn't Have to Be Complicated
If you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong
The wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term Care
Many people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?
Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Such Attractive Yields in High-Grade Munis Are Rare and May Not Last Long
According to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
-
Financial Analyst Sees a Bright Present for Municipal Bond Investors
High-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.