We are all aware of the ticking time bomb that we call student loan debt. However, did you know it is affecting senior citizens? According to a recent article in The Washington Post (see below), the number of seniors going into their retirement with student loan debt has spiked by a whopping 500 percent since 2002. With seniors receiving an average of $1,300 a month in social security, the student loan burden is slashing their benefits to the bone.
At least 36,000 people age 65 and older had their benefits cut to pay student loan debt in 2013, a 500 percent increase from the 6,000 seniors who faced the same loss in 2002, according to the General Accountability Office. Researchers found that the total outstanding student loans held by seniors grew from $2.8 billion in 2005 to $18.2 billion in 2013
In an interview last week, student loan management and consolidation expert Bruce Mesnekoff stated that someone on social security could lose as much as 15% of their social security payment because of defaulting on student loan debt. That is significant considering many are living solely off of social security.
Listen to the interview with Bruce here!
Student Loan debt is the one debt that will never go away. You can dissolve in bankruptcy and you can’t treat it like credit card debt. You don’t pay and the consequences are three fold.
First, they add a 25% penalty on top of the amount you already owe. For example, say you owe 50,000 student loan debt and you default. They will add an additional $12,500 to what you already owe.
Second, they raise your interest rate to 18%. With that interest rate, chances are you will pay for a very long time.
Third, they garnish your wages and take the payment that way. If you are going to borrow to go to school, just know you are making a deal with a loan shark. They are happy to finance over 100% in some cases of your education costs. However, you don’t pay and they own you.
If you find yourself in trouble, Bruce Mesnekoff runs an incredible business that can help you take advantage of the government programs designed to provide help. His site is http://thestudentloanhelpcenter.com.