Increasing number of American retirees affected by student loans

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student loans impact on the American senior population

Are you a senior who has a student loan debt?  What happens to student loans when you retire? Are you worried about the amount of retirement benefits you will get? Can the Social security really counterbalance the proceeds of these social insurance retirees and the disabled with these student loan debts? Many seniors have defaulted on student loans. The loans could have been taken by the seniors or others. Nonetheless, social security has been recompensing the benefits of the social insurance retirees and disabled seniors with these debts.

Younger Americans have for a long time been affected by student loans and this has been highlighted so much so that the other reality, that the American seniors are already feeling the pinch due to a hike in fees and student loan has been forgotten. This has impacted them so much that their financial security is at risk. General house hold financial liability is growing. This trend is being credited to students’ loan and the load being borne by the American pensioners. Students loan debt, which has an adverse effect on the capacity of younger employees to put money aside for retirement, is today the second major source of domestic debt. Do the loans have any effect on the senior pensioners? What is not known is that the effect of the growing student debt on the pensionable Americans today find it actually tough to pay off these arrears. Consequently, the pensionable Americans are contributing more to the surge in the aggregate domestic debt, owing as much as 60% of the total debt.

According to the American law, social securities are able to use retirement and incapacity proceeds to reimburse student loans which have been defaulted. They can use 15% of the retiree’s benefits. However, the benefits should not be reduced below a minimum of $750 monthly which translates to$ 9000 annually. No amount can be offset from the supplementary security income to settle the debts.

Before the offset starts, social security is required to send a notice, therein showing the name together with contact details for the agency that is asking for the commitment, to notify the borrower about the start of the offset. The borrower cannot however contest, petition or inquire this liability to the social security. Incase the debtor would like to do so; they should conduct the agency from which the loan was taken. If successful, the borrower should negotiate a payment strategy, or cite hardship to the crediting entity.

For the debtors to avoid an offset, they should withdraw the student loan from default. Here, the debtor has the option of choosing to use the income-based repayment as a way of repaying the amount owed.

From the year 2012 to 2017, the average total of student credit debt has come close to doubling. The two causes of this trend have been the fact that the number of parents or guardians ratifying their children’s private student’s credits has increased tremendously and also the substantial rise in the number of adults getting back to study with a view to support their career prospects in this very challenging world. Combined, these factors have enlarged the student loan burden on the senior population.

The retirees are not the only lot affected by the student’s loans. The ability of millennials to start saving for retirement is put at risk as they prioritize paying off their loan and other monthly bills and expenses.

Legislators have made observations on the increasing student loan situation and a recent statement by the Aspen Institute has called to attention the variety of solutions being projected. These measures include the cancelation of some if not all the outstanding loan or develop the use of the planed income driven refund. Although much consideration has been intensified on the effect of the student loan on millennials, whatever policy modifications should take into account the full-size impact of the situation as well as the part it plays in the senior Americans lives.

From this information, it is crystal clear that, together, the young and elderly American population are progressively feeling the pinch as their investments in their education are actually forming a dusky cloud impending over their retiring instead of improving their future.


  • What is the USA’s Social security is an independent agency of the US federal government that administers social security, a social insurance program consisting of survivor benefits, retirement and disability benefits?
  • Income based repayment is a student loan repayment program in the US that regulates the amount that one needs to pay each month based on one’s current income and family size.
  • Offsetting of a student loan-According to the law, social securities are able to use retirement and incapacity proceeds to reimburse student loans which have been defaulted. They can only use 15% of the retirees benefits to repay the loan.
  • Can student credit be taken out of social insurance to offset the loan? Legally, social insurance can be used to pay off loans taken by students.
  • At what age should someone stop paying student lending? After 25 years or 35 years in the case of Scots with the assumption that no rules have been breached.
  • When is a debt classified as delinquent? It is when a debtor fails to reimburse the loan within 3 months after employment.

DISCLAIMER: The information provided in this blog is for informational purposes only and should not be considered legal advice. The content of this blog may not reflect the most current legal developments. No attorney-client relationship is formed by reading this blog or contacting Morgan Legal Group.

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