Today, we released a report that shows that older Americans now carry an unprecedented amount of student loan debt into retirement.
The report shows that over the last decade, the number of older student loan borrowers has quadrupled in the United States. The amount that these borrowers owe has also dramatically increased. Between 2005 and 2015, consumers age 60 and older were the fastest growing segment of student loan borrowers. These trends not only reflect borrowers carrying student debt later into life, but also the increasing number of older consumers that have borrowed or co-signed student loans for their children’s or grandchildren’s college education. Additionally, a recent government found that an increasing number of older Americans age 65 or older have defaulted on their federal student loans and have been subjected to offsets of their Social Security benefits in order to repay this debt.
We heard from older student loan borrowers about issues they face with student loan servicers and collectors. Here are some tips that can help consumers navigate these challenges:
1. If you’re struggling to make your monthly payments on a federal student loan, you have the right to apply for a repayment plan that can lower your monthly payment based on your income.
Complaints suggest that some student loan servicers don’t inform borrowers of the option to request lower payments after experiencing a drop in income, for example upon retirement. The Department of Education offers numerous plans to borrowers with federal student loans, including most Parent PLUS borrowers, that help make payments more affordable, including “income-driven repayment” (IDR) options that can set your monthly payment based on your income.
To start making payments under an IDR plan, enroll online at StudentLoans.gov. You can also contact your student loan servicer about enrolling. You will be required to submit proof of your income, such as a tax return, pay stub, or a benefits check, to determine your payment. Your servicer also can help you explore other repayment options available to you. For more information on ways to lower your student loan payment, check out our Repay Student Debt tool and explore your options.
2. If you’ve been asked to co-sign a loan, it’s important to understand your responsibilities as a co-signer and whether potential co-signer release or loan discharge options may be available.
Some older co-signers say that they are having trouble repaying the loan they co-signed for a child or grandchild. Others complain that when initially co-signing a loan, lenders promised opportunities for co-signers to be released from the loan upon making a set number of timely payments. These borrowers state that despite making these timely payments, servicers do not release them as co-signers.
As a co-signer, you’re not merely vouching for someone’s ability to repay a loan; you’re taking full responsibility to pay back the loan. If the primary student loan borrower stops paying the loan, you’re responsible for making the monthly payments. If you’re thinking about co-signing a student loan, make sure to understand your responsibilities as a co-signer and whether you will be eligible for a co-signer release. It’s important to remember that co-signers of private loans may not be eligible to discharge their loans due to permanent disability of the primary borrower.
If you’ve co-signed a loan and are interested in learning about co-signer release options, check out our consumer advisory for more information.
3. As a student loan co-signer, you can request access to account information, even if you’re not the primary loan borrower.
Many older co-signers complain that despite remaining financially responsible for the co-signed loan, student loan servicers do not provide them full access to loan information, preventing them from being able to pay off a loan in full or determine an outstanding loan balance.
If you’re a co-signer, missed payments can negatively affect your credit. You can always request access to all account and repayment information to help you make informed financial decisions and protect your credit.
4. Debt collectors generally cannot offset protected benefits, such as Social Security benefits, in order to repay a private student loan.
Social Security benefits are protected from offset for delinquent or defaulted private student loans. Complaints indicate that older borrowers may be subject to harassing collection tactics and threats when the primary borrower fails to pay.
Your Social Security benefit usually may only be offset to pay back an outstanding debt to the U.S. government, like a federal student loan. Debt collectors may not offset your Social Security benefit in order to repay a private student loan.
You have a right to be heard. If you’re experiencing any of these problems with your student loan lender or servicer, submit a complaint, and we will help you get a timely response. If you’re having trouble managing your student loan debt, visit our Repay Student Debt tool to learn more about your repayment options or check out our Ask CFPB questions on student loans.
Stacy Canan is the Assistant Director of the CFPB’s Office for Older Americans. To learn more about our work on behalf of older consumers, visit consumerfinance.gov/older-americans.
Seth Frotman is the CFPB’s Student Loan Ombudsman. To learn more about our work for students and young consumers, visit consumerfinance.gov/students.