Understand and Avoiding Student Loan Debt at Retirement Age

There was a frightening article for future retirees in the Washington Post last week. Some $35 billion in past due student loan debt is owed by those 60 and older. While anyone can fall behind in student loans, it’s important to understand how much student loan debt can ruin your retirement dreams and how those currently struggling found their way into their current predicament.

Sallie Mae Student Loan

Photo by jk5854

Still Paying Loans 30 Years Later!

The problem with tackling our debt is that there are so many loans to deal with. It’s not uncommon for someone to have credit card debt, student loans, a car payment and a mortgage. What debt is worse? What do you pay off first? Credit card debt has the highest interest, but student loans are unforgiveable.

There are those that are retirement age still paying for their education from decades ago and the biggest factor is that student loans are unforgivable. So regardless of what you can or do pay, the interest on student loans is going to accrue until you finally pay them off. Not to mention that government loans have multiple payment options that can extend terms of payment.

What you need to walk away understanding is that if your loan balance is not decreasing every month, you could be paying off the loans for the rest of your life.

Is College a Good Idea Late in Life?

One growing career trend over the last twenty years has been the extinction of lifetime employment. It’s left many seasoned employees out of work, late in life, with credentials lacking an advanced degree, certification or training. For many, the obvious step has been to get up to date on education. While going back to school might be your only viable option, you do need to weigh the risks of student loans.

The biggest thing to remember is that any amount you spend in loans needs to be offset by income. It requires you to take a serious look at what you might be earning after college, how long you want to be working and whether those gains are worth the costs. I hate to be the bearer of bad news, but if you need to go back to school in your late fifties just to retain the income you lost, that trip back to academia is probably not going to be worth the effort.

Picking up the College Tab for Your Grandchild

This really needs to be written across the top of any student loan promissory note:

“When you cosign, the debt is yours, not your progeny’s, and if you do assume payment on this debt, it’ll be a lot more than you thought!”

Here is how this story goes. Grandma cosigns on $20,000 for her gifted granddaughter thinking at worst, $20,000 is no worry. In this case Grandma has vastly underestimated the amount of money she is risking.

Think of it this way. A student can defer loans while interest accrues until they are done with college. This means that if your grandchild takes 6 years to graduate that $20,000 is already several thousand larger. What if your grandchild goes off to graduate school for 2 years? Now interest has accrued for 8 years and hasn’t once needed to make a payment. If the loans are government backed, there will be a 6 month grace period before loans are due.   Then there are several years of potential forbearance and creative payment plans like income-based and graduated that will keep you out of the loop and the loan balance growing.

It’s not out of line to believe you could be on the hook for $60,000 or more by the time the bank comes to you for payment.

Student loans are risky, but less so for young adults who have a long time to make up for them. If you are nearing retirement age, you should avoid student loans if you can and accept them with extreme caution if you can’t, because struggling with student loans once is all it takes to struggle with them forever.

Debt Consolidation Loans Program: The Elixir to Debt Woes

Debts are serious vices which can inflict severe damage to your personal finances. If debts are not tackled in time, it can reach to some unmanageable proportions and you may have to face the severe consequences of bankruptcy. And, it is imperative that you must out in serious efforts so as to avoid bankruptcy. One of the smart debt solutions available to you is to opt for debt consolidation loans program. The major advantage of this program lies in the fact that it does hurt your credit score negatively. Rather, if you make regular payments, your credit score is actually increased. On the other hand, bankruptcy is the last resort available to you. If you file for bankruptcy, you have to go through the painful court processing as well as bankruptcy inflicts permanent damage to your credit score. Moreover, it jeopardizes your chances of obtaining a new loan with favorable terms and conditions.

If you are into debts and make delay or default in making payments to your credits, you are likely to get harassing collection calls from the creditors or the collection agencies. And, if you ignore these collection calls, the consequences may be graver. Your creditors are legally permitted take you to the court. And in some cases your wages may also be garnished. So, instead of completely ignoring the harassing collection calls, you should explain your financial situation to your creditors and request for rescheduling your debt repayment. Even if you face hardship in making multiple payments to your creditors, you can opt for debt consolidation program.

Debt consolidation is a very popular debt elimination program which combines all your unsecured debts into a single big debt and you are required to make single monthly payment. Your monthly payment amount is also reduced in comparison to the total monthly payments that you were paying before opting for debt consolidation program. And, by making the single monthly payment for a certain period of time, you finally become free of your debts.

Whatsoever, in the debt consolidation program, it is very much important to find a genuine debt consolidation company first. This is very much important because if you are caught in the hands of an unethical consolidation company, your endeavors to eliminate your debts are aborted. And, in order to find a genuine consolidation company, you can consult with your friends and relatives who have already undergone the debt consolidation exercise successfully. Whatsoever, it is recommended that you must check the genuineness of the debt consolidation company that you have chosen with the Better Business Bureau (BBB) website. If your chosen company has unblemished records with BBB, you can be rest assured about its credibility.

The consolidation loans company then assesses your financial situation and decides upon your single monthly payment amount after consultation with your creditors. You are then required to pay the single monthly amount to the consolidation company, who then distributes the amount to your creditors.


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