There’s no question that the more than $1 trillion in college loan debt is imperiling Americans’ financial future.
Taking that debt into retirement is even worse. According to the Center for Retirement Research at Boston College (CRRC), “While the overall magnitude of student debt held by those ages 65 and over is not large, the debt burden in this group has been growing rapidly.”
“At the same time, their default rates have also been rising,” the CRRC notes. “This trend is a particular concern because retirees with delinquent student loans can have part of their Social Security benefits withheld to pay for the loans. Such withholding may disproportionately harm disadvantaged groups as they are more likely to have delinquent loans.”
If you hold federally guaranteed loans, you have a few options through the U.S. Department of Education.
You may qualify for loan forgiveness under certain conditions. This program mostly applies to public service workers and members of the military.
Only federal student loans held by the U.S. Department of Education (ED) qualify for cancellation. The following types of federal student loans with an outstanding balance as of June 30, 2022, are eligible for relief:
- William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans held by ED or in default at a guaranty agency
- Federal Perkins Loan Program loans held by ED
- Defaulted loans (includes ED-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, and graduate PLUS; and Perkins loans held by ED)
This means that subsidized loans, unsubsidized loans, parent PLUS loans, and graduate PLUS loans held by ED are eligible for cancellation. Federal Direct Consolidation loans are also eligible for relief, as long as all of the underlying loans that were consolidated were ED-held loans and were disbursed on or before June 30, 2022.
Consolidation loans comprised of any FFEL or Perkins loans that were not held by ED are also eligible, as long as the borrower applied for consolidation before Sept. 29, 2022. If you don’t know whether you received a Pell Grant or what type of loans you have, you can find out by logging into StudentAid.gov and selecting “My Aid” in the dropdown menu under your name.
Note: Private loans (i.e., non-federal loans) are not eligible for federal debt relief.
Keep in mind that a broader loan forgiveness program offered by the Biden Administration is still tied up in Washington and the courts. Stay tuned for details.
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