Wednesday, December 21, 2016

There is NO Reason Whatsover for Those on Fixed Incomes to Default on Student Loans

And I am talking here about actually student loan debt a person has incurred, not from co-signing able-bodied kids. I mean debts one incurs when trying to "retrain" for another "career."

The fact is there is NO reason to default on those loans. None.

There is something called the "income-based repayment plan" for those with old student loan debt and who have use up all of their deferments and forbearances. Few people even KNOW about this. I learned about it only through internet research, and I am on such a plan now.

Parents shouldn't co-sign student loans for their kids anyway because those loans are not dischargeable in bankruptcy. They are stuck.

From the article:

The number of older Americans defaulting on education loans has steadily increased in recent decades, as many have returned to college or co-signed loans for family members. Unpaid debt has resulted in the government garnishing the benefits of 114,000 people age 50 and older in the past year, more than half of whom were receiving Social Security disability rather than retirement income, the GAO report said.

Garnishment exacerbates an already precarious financial situation for the 67,300 older borrowers who receive benefits below the poverty guideline, which is set at about $990 a month for a single adult. Even though no more than 15 percent of a recipient’s monthly Social Security payments can be taken in debt collection, that threshold has never been adjusted to reflect the increased cost of living.

“We can’t be garnishing people’s Social Security in a way that puts them into poverty,” said Sen. Claire McCaskill (Mo.), the ranking Democrat on the Senate Special Committee on Aging. “We need to make sure that we have adjusted the ability of the government to recover those loan amounts in a way that is not spiraling people into poverty.”

Like I said, if you are on a fixed or very modest income, you need to look at income-based repayment.

1 comment:

Diana Sparks said...

Student loan is a huge problem and I think that many people in the US are struggling to repay their loans. The thing is that prices for higher education are just sky-high and it’s unaffordable for many of young people and their families. Thus, most young people choose to get in debt and apply for a student loan. At least, it’s important to make student loan payments comfortable and give borrowers the time to start making payments. Some people even use quick cash approved online to repay their student loans.