Can Senior Citizens Get Biden Student Loan Forgiveness?

Medicare Benefits Solutions
Oct 26, 2022

Last updated 12/13/22: This student loan forgiveness for social security recipients article was originally published on October 26, 2022. Since then, Biden’s student loan forgiveness program has been placed on hold while the US Supreme Court considers challenges to the proposed debt relief package.

Debt Forgiveness for Seniors

You’ve probably read headlines touting President Biden’s efforts to provide relief to the millions of Americans who have student loan debt. If you are holding loans from your educational pursuits, you may benefit from this, but there will be restrictions.

If you’re 65 or older or retired, you may be living on a limited income and wondering if you’ll be affected by the student loan forgiveness programs.

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Student Loan Debt Relief

On August 24, 2022, President Biden announced the fulfillment of a campaign promise to provide student debt relief. The White House announcement stressed the need for this program, referring to Department of Education data showing that “the typical undergraduate student with loans now graduates with nearly $25,000 in debt.”

Debt holds people back from buying a home, starting a business and saving for retirement, causing a ripple effect on the economy as a whole.

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What is Biden’s Student Loan Forgiveness?

The new student debt relief program will forgive $10,000 in outstanding federal student loan debt for students from middle-income families. To be eligible, your annual earnings must be under $125,000 if you are single or $250,000 if you are married. For purposes of federal income tax, debt relief payments will not be treated as taxable income.

Students from low-income families who qualify for a Pell Grant are eligible for an additional $10,000 of loan forgiveness up to a total of $20,000. If you are from a family with less than $60,000 annual income but are not a Pell Grant recipient, you may also be eligible for student loan relief.

According to Federal Student Aid, a branch of the Department of Education, Federal Pell Grants are typically limited to undergraduate students who can demonstrate an exceptional financial need.

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Who Will Benefit From Biden’s Loan Forgiveness?

About 95% of student loan borrowers, equating to 43 million people, can benefit from these actions, according to President Biden, driving home the point that the student loan forgiveness program aims to help families who need it the most. Of these 43 million borrowers, over 60% of Pell Grant recipients qualify for $20,000 in loan forgiveness. Almost 45% can have their debt fully canceled.

The timing of this initiative coincides with the return of student loan payment obligations waived during the pandemic. As borrowers recommence payments in January 2023, money will return to the treasury.

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Can Seniors Get Student Loans Forgiven?

Are you one of the senior citizens with student loan debt? Senior citizens can get student loan forgiveness but not based on age or retirement status.

Here is the age breakdown of borrowers who qualify for relief, according to Department of Education estimates:

  • 21%: Up to 25 years old
  • 44%: 26 through 39 years old
  • Over 33%: 40 years of age and older, of which 5% are senior citizens

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Are Federal Student Loans Forgiven at 65?

Are you wondering if there is student loan forgiveness for senior citizens? They might, though not due to age. There is currently no federal student loan forgiveness program that targets seniors. The Biden-Harris plan is income-based. Other public programs factor in who you work for and your health status.

The Problems With Senior Student Loan Debt

Some older adults are paying off student loans for themselves, and others are making payments toward Parent PLUS loans used to help fund their children’s college education. Debt limits a senior’s ability to save for retirement and pay for uncovered medical expenses. Student debt also jeopardizes Social Security income.

Can Social Security Garnish Student Loans?

The Treasury Department has the authority to garnish up to 15% of social security income or collect against tax refunds. The Washington Post reported that nearly 40% of borrowers aged 65 and up are in default, and about 54% of borrowers aged 75 and up are in default. Some people are trying to get out of debt by filing for bankruptcy, but bankruptcy normally does not discharge federal student loans.

Finding Student Loan Debt Relief

Student loans can cause financial stress for years, and affect your finances for decades. Although there is no age-based public student loan program, senior citizens are eligible to apply for the same programs as others looking for student debt forgiveness.

Top loan forgiveness for senior citizen options include:

  • Public service loan forgiveness
  • Income-driven repayment plan
  • Total and permanent discharge
  • Private loan options
  • Federal direct student loans

Public Service Loan Forgiveness (PSLF)

The PSLF is available to employees of military branches, government offices and qualifying nonprofit organizations. You have to make 120 payments before you qualify for this program. Qualifying loans include Parent Plus loans but only if the parent works in public service. PSLF requires active employment, so the program is not available to retirees.

Income-driven Repayment (IDR)

Borrowers approved for an IDR plan may carry their loan into retirement because IDR loan payments can run for decades. After 20 to 25 years of payments, your balance is forgiven, assuming you have dutifully met all your loan obligations. One of the benefits of this loan is the reduction of payment amounts required as your taxable income decreases.

Total and Permanent Discharge (TPD)

If you no longer have the capacity to work because of a physical or mental impairment, you can apply for a Total and Permanent Discharge, AKA TPD. If your doctor, the Social Security Administration (SSA) or the Veterans Administration (VA) certifies that you are unable to work, you can apply. The Department of Education reserves the right to monitor your earnings and reinstate the loan if your earnings rise above state poverty guidelines.

Private Loans

Another option is to access funds outside the government programs. This may include taking a personal loan or borrowing from your 401K plan. A financial advisor, loan servicer, or a Department of Education representative can provide guidance in determining the course of action appropriate for you.

Federal Direct Student Loans

The student loan debt cancellation program pertains to federal, not private, loans. The administration recently announced that loans from the Federal Family Education Loan (FFEL) program, terminated in 2010, do not qualify for the student debt relief program. FFELs were loans from private banks backed by the federal government. An option may be to consolidate FFELs into federal Direct Loans and then apply for student debt relief.

Beware of Senior Scams

Unfortunately, scammers seem to abound when the government announces the distribution of funds to people, especially people most vulnerable. Become familiar with common senior scams, and contact the Federal Trade Commission (FTC) if you think you have been victimized. You can file a report online or call 1-877-382-4357.

To protect your financial and physical health, also be on the lookout for Medicare scams. Reach out to a licensed insurance agent to help you understand and navigate Medicare costs.

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