Student loan debt is a burden at any age, but if you’re older and concerned about your debt’s impact on your retirement, the stress is definitely multiplied.
The Washington Post recently reported that the amount of debt that seniors in America hold is now $18.2 billion. Some senior citizens have had their wages or their social security benefits garnished due to difficulty paying down their balances.
Luckily, there are many options available to older borrowers, those who are repaying their loans into their 40s, 50s, and beyond. While each of these options aren’t necessarily easy, they can be effective in reducing student loan debt.
1. Consider Downsizing/Moving
CNN recently published a story about a woman named Rosemary Anderson who owes $152,000 in student loan debt at age 57. Anderson consolidated her loans, but because of federal borrower rules, she cannot refinance her loans with the government. She lives in California, makes $3,400 a month, and carries a $2,200 mortgage.
Although the article doesn’t say whether or not Anderson will change her living situation, she should consider this given her high mortgage payment and student loan debt. This might mean moving to a different city or state to lower her cost of living, allowing her to pay more towards her debt.
I realize this can be a difficult choice for some, especially for those who have been residents of their communities for quite some time or if they live close to family and don’t want to move.
However, moving can take different forms and can be temporary. Maybe it’s just moving to a smaller house or condo in the same city (which many “empty nesters” do). Or maybe it’s retiring outside the U.S., like these people who live on as little as $40/day have done. The goal is to reduce living costs without sacrifcing much or anything in quality of life.
2. Find Ways to Increase Your Income
It’s never too late to increase your income, which can help you pay your student loans faster, and there are many ways to do so.
For example, taking part in the sharing economy is a great way to make extra income. If you drive a reliable car and are accustomed to using a smartphone, you can make extra money driving for Uber or Lyft, which are ride-sharing companies.
This is a wonderful job for someone who is retired because you can choose the days and times you want to drive.
To give another example, maybe you love to read books. You can get a weekend job at a local bookstore or at Barnes and Noble. Larger chain stores typically have very flexible hours so you can continue to work your full-time job and side hustle if you are still working.
You can also rent out a room in your home on a Web site like Airbnb to travelers looking for hotel alternatives. The benefit of this type of side hustle is that it would require very little upfront work. Simply spruce up your guest room, take quality photos of it, list it on Airbnb, and offer a great experience to your guests so they leave you positive reviews and help grow your business.
Another way to make more money is to ask for a raise in your current job or change companies to a similar job that might pay you more. Any time you increase your income, put the extra money towards your student loans.
3. Consider Refinancing
Refinancing is definitely an option for borrowers who are older. When you refinance, you are essentially getting a whole new loan at a lower interest rate.
When you switch to a lower interest rate, you can save a significant amount of money on interest, even if the difference in rate is only a few percentage points. By refinancing, you can also shorten the term of your loan or lengthen it depending on the monthly payments you are able to make.
The main drawback in refinancing federal student loans with a private lender is that you will lose many of the benefits that are specific to federal student loan borrowing, like Income-Based Repayment or Pay As You Earn Programs.
4. Sell Off Possessions
Chances are, if you’re older, you’ve spent a lifetime acquiring possessions. Paying off your student loans is a great reason to reduce your possessions and make money through selling them.
Use a website like Craigslist or eBay to help sell your possessions. In order to be successful, be sure to be very descriptive about the quality of the items, take great pictures, and keep the price low. Also, if you sell on Craigslist, remember to always meet your buyer in a public place to ensure you own personal safety.
This entire process does take a significant amount of time and effort, but it is well worth it. When I sold nearly all of my belongings before moving out of the country a few years ago, I was able to make $2,000. Think about what that kind of money can do for your student loan balance!
5. Overcome Problems Making Payments
If you use all of the tactics above, including increasing your income, moving locations, and selling your possessions, and you are still having trouble making your repayments, know there are many ways to get help.
First, contact your student loan servicer to see if you can lower your payments. Income-based repayment plans are available to federal student loan borrowers.
If you still have trouble making payments, you’ll want to avoid defaulting on your student loans. If your payments become more than 270 days late, your loans will go into default.
When this happens, the government can take a portion of your social security benefits.Bloomberg reported that in the first part of 2014, the federal government garnished portions of 140,000 people’s social security checks.
If you’re undergoing a hardship, see if you’re eligible for student loan forbearance before you stop making payments.
With enough hard work, budgeting, and perhaps starting extra work on the side, you can focus your efforts for a few years on reducing your student debt burden completely so you can live out your retirement years in peace.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|