I’m 69 and ‘never got a job that paid well.’ How can I tackle student loan debt?

Question: I went back to college to get my degree after my children had grown up and my mother passed away. I left my job as a corporate childcare center director to care for my mom. I never got a job that paid well after school. I would start to pay my loan, then stop paying to put it in forbearance. Because I’m married, I don’t think I qualify for the income-based reduction in payments. I’m 69 years old and retired due to stress and high blood pressure. I’m guessing that I may pass on with this debt attached to my name. What can I do?

Answer: The first thing to know is this: “Federal student loans and about half of private student loans provide a death discharge, which cancels the remaining debt upon death of the borrower,” says Mark Kantrowitz, author of Who Graduates From College? Who Doesn’t?. That means that surely your federal loans, and possibly your private loans, won’t fall on your loved ones when you pass away. To find out if your private student loan could be erased in case of death, you’ll need to call your servicer and inquire about their policies.

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Disability discharge for student loans

Borrowers who have a severe disability that prevents them from working might wish to explore the Total and Permanent Disability (TPD) discharge. “If a doctor certifies that you’re unable to engage in substantial gainful activity because of a permanent disability, your federal student loans will be discharged,” says Kantrowitz. TPD discharge requires that borrowers provide documentation from the U.S. Department of Veterans Affairs, the Social Security Administration or a physician to demonstrate that they are disabled, explains Amanda Push, student loan debt and higher education expert at Student Loan Hero, says.

However, “if the loans are private, they may have a more difficult time getting them discharged, though some private lenders do offer debt forgiveness in the case of permanent disability,” says Push.

If you let Nelnet (the TPD discharge processor) know that you’re applying for discharge, they will suspend your loan payments for 120 days to allow you time to complete the application process, says Leslie H. Tayne, financial attorney and founder of Tayne Law Group. “If your application gets approved, your student loan debt will get erased, however, you’re not entirely off the hook until you get through a 3-year monitoring period, during which if you earn more than poverty-level wages, take out a new federal student loan or get a notice from the SSA that you’re no longer disabled, your debt will get reinstated,” says Tayne. That said, if you’re sure you’ll never work again or cannot recover from your ailment, the TPD discharge could take the burden off your shoulders.

Income-driven repayment plans for student loans

Now let’s address what your options are now, assuming you have federal loans. You say you’re not eligible for an income-driven repayment plan (there are four, and you can see which one suits you best here) because you are married, but if you file your taxes separately, you might be. “The loan payment will be based on just the borrower’s income if a married borrower files federal income tax returns as married filing separately and repays the loans under the ICR, IBR and PAYE repayment plans,” says  Kantrowitz. However, “the loan payment for married borrowers will be based on joint income if the borrower repays the loans in the REPAYE repayment plan regardless of tax filing status.” 

However, note that filing tax returns as married filing separately causes the taxpayer to lose certain tax breaks, such as the student loan interest deduction, but still may yield a lower monthly student loan payment under ICR, IBR and PAYE. And if you have private loans, you likely can’t get an income-driven repayment plan.

Be careful about another forbearance

Kantrowitz says you’ll want to very carefully consider a forbearance as they’re not a good long-term solution for financial difficulty. Interest continues to accrue during a forbearance and will be added to the loan balance — digging you into a deeper hole.

*Letters edited for clarity and brevity