Author Topic: Retirees Stuck with Student Loans  (Read 6570 times)

menorman

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Retirees Stuck with Student Loans
« on: August 08, 2012, 07:35:38 PM »
Apparently, there's been an increase in retirees who are having the government withhold part of their Social Security payments to some retirees to cover student loan payments. While it at first glance elicits cries of sympathy, I wish journalists would start taking statistics classes so we can know what's really going on here. Also, the implication is that most of the loans are for children or grandchildren, not the retirees themselves. There is indeed quite a problem if someone manages to go an entire 40-year career with student loans. But assuming most are from the kids/grandchildren who are employed, asking them to provide the shortfall seems like the obvious solution.

simonsez

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Re: Retirees Stuck with Student Loans
« Reply #1 on: August 09, 2012, 05:55:27 AM »
Yes, I am sure nearly all of these cases are loans provided for dependents because federal student loans are forgiven after 25 years.  Either way, an obligation is an obligation.  It said in the article that this population were all behind on their payments.  If you are of average retirement age or older and haven't figured out finances or become fully competent at planning, why are you signing your name on someone else's loans? 

I also think ignorance may be at play here.  I manage all my federal student loans online and was able to read up on the pertinent info related to financial hardships, forbearance, deferment, etc. quite easily when I was unemployed for a couple months after graduation.  I'd say those mentioned in the article will be more likely to not be aware of the financial options/resources available before the S.S. checks start getting zapped compared to the actual student going to school for those loans.

menorman

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Re: Retirees Stuck with Student Loans
« Reply #2 on: August 09, 2012, 03:56:32 PM »
Yea, the article did allude to some retirees being in the dark about the loan being in arrears. At the same time, the DoEd said that anyone who is getting their SS check cut back hasn't made a payment in probably at least three years. DoEd tries to collect for two years, then they send it to a collections agency which tries for another couple months before they send it off to the Treasury, which then makes two additional attempts at collecting. That's a pretty long process, and I'd assume that at some point in there, the (soon-to-be) retiree should probably ask the kid/grandchild benefiting from the loan to explain what exactly is going on.

But the bigger story here is that apparently retirees are expecting a majority of their expenses to be covered by SS, so this 15% haircut sends them skidding downhill. Quite honestly, someone who is either living such a high lifestyle/so leveraged as they knock on retirement's door that they can't handle a 15% deduction in income probably isn't really ready to retire anyway.

Jamesqf

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Re: Retirees Stuck with Student Loans
« Reply #3 on: August 10, 2012, 12:47:19 AM »
On the loans being for kids/grandkids, I think you're forgetting that quite a few people go back to college (or even to college for the first time) well after the traditional age.  I was in my mid-30s before I finished my BS, and have gone for MS and PhD since. I didn't take out loans for the advanced degrees, but I could have done so.

StashinIt

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Re: Retirees Stuck with Student Loans
« Reply #4 on: August 17, 2012, 01:21:24 PM »
On the loans being for kids/grandkids, I think you're forgetting that quite a few people go back to college (or even to college for the first time) well after the traditional age.  I was in my mid-30s before I finished my BS, and have gone for MS and PhD since. I didn't take out loans for the advanced degrees, but I could have done so.

Maybe, but I would be very surprised if this happens in over 20% of the cases. No facts, just supposition. Sorry.