I now owe 3x what I originally borrowed in student loans. What can I do?

Question: My student loans are over 10 years old, I’m not working in the field I have the degree in, and one of the schools has closed. I can’t afford to retire — I’m 67 years old and can’t live on Social Security alone. I have paid and had garnishment against me, and now it’s three times what I borrowed. I’m expected to pay $600 a month. I can’t afford to feed myself. What can I do?

Answer: Borrowers with less-than-perfect credit records face challenges while climbing out of debt, and they can get steeper when you’re older because income tends to plateau. Pros offer steps to help you navigate — for potential loan discharge from a closed school, to income-based-repayment plans that could lower your payments significantly. (Note that income-based repayment plans will not be available to you if you refinance your federal loans, so you’ll likely not want to go that route. However, for borrowers with private loans, refinancing may be appealing now as rates are low.)

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Student loan borrowers nearing retirement are in a difficult position, especially if they’ve taken a forbearance or two, or if they have a past default that slowed them down, according to Anna Helhoski, student loan expert at NerdWallet. “Interest takes its toll as the years go on, as well,” she says. So much so an original loan of, say, $20,000 can triple into a $60,000 debt, thanks to time, interest and penalties, says Andrew Pentis, loans expert and certified student loan counselor at StudentLoanHero. 

“This is actually very common,” Pentis adds. His company’s research shows that “the vast majority of borrowers” don’t pay their loans on a 10-year standard plan. “They usually linger on for years and years and years.”

Federal student loan borrowers who’ve defaulted can have Social Security benefits or, for that matter, tax refunds seized to pay delinquent debt. “That’s just the way the rules are right now,” says Pentis. “In some cases, a borrower could see their entire federal payments seized, depending on the size of their debt and their Social Security.” (Until Nov. 1, 2022, the government has paused seizing such payments.)

Get on an income-driven repayment plan if you can

Experts agree that the best possible option for this borrower to lower the monthly burden would be applying for an income-driven repayment plan (IDR). There are four, and all are designed to maintain affordable monthly payments relative to income. 

“This could be especially helpful for borrowers who are aiming to retire since it lowers your monthly payment. If your payment is low enough — less than the interest portion of your payment — the government may cover some interest and the rest could eventually be forgiven,” says Helhoski. “It takes a long time — up to 20 years once you enroll in an income-driven repayment plan.”

Defaulting can complicate things, Pentis acknowledges. “It’s not too late for IDR,” he says. “What they’d need to do is rehabilitate or consolidate their loan with the federal government by catching up and making payments. It’s very unlikely that they’ll be able to catch up quickly because they just don’t have that income to do it.”  

Manage other debt as well

Pentis recommends reaching out to a certified student loan or credit counselor and enrolling in a debt-management plan that will factor in balances for loans, credit cards, and other sources. They can work with borrowers to set up a plan to stave off those garnishments and put them on track to being debt-free. That will free up income for meals.

Look into student loan debt discharge

On the other hand, the fact that one of the academic institutions the borrower attended is closed merits attention. “There is such a thing as a closed school discharge by the federal government,” says Pentis, adding that there are conditions to qualify for full or partial debt discharge. That includes being enrolled when it closed or withdrawing 120 days before it shuttered. Forms at studentaid.gov include the details.

Regarding the borrower’s point about not working in the field studied in college, Leslie Tayne, founder and managing director of Tayne Law Group, points out that it’s not relevant to student loan repayment. “You can’t negate a degree — or not pay for it — because your career took a different roadmap into a different sector,” she says.