Retiring with student loans? What to do first

A growing number of seniors are retiring with student loan debt. Current and future retirees can learn about options here, including when to refinance student loans. (iStock)

Student loans are not just a young person's problem. In fact, troubling data shows a growing number of senior citizens are still paying back educational loans -- either if they have already gone to college, or loans they took on behalf of their children.

In fact, a 2019 report from the AARP found that Americans aged 50 and over owed 20% of the total outstanding student loan debt in the U.S., with collective debt among people in this demographic group totaling around $289.5 billion. Older data from the Consumer Financial Protection Bureau also revealed that Americans aged 60 and older account for 6.4% of student loan borrowers.

Owing money on student loans in your 50s, 60s or 70s can be a substantial burden. Retirees are often on a fixed income, which makes affording monthly payments difficult. Seniors who are already retired or approaching retirement should explore their options for managing debt. This includes deciding whether it makes sense to refinance student loans.

Credible can help you explore student loan refinancing options to help you decide. Visit Credible today to compare rates and terms from multiple lenders without affecting your credit.


Undergraduate student loans are just the tip of the iceberg when it comes to paying for college. Loans for graduate school, medical school or law school can also pile onto the already-long life of the loan. While you do have repayment options, it may be beneficial to consider these courses of action to make sure your school loans don't heavily impact you upon retirement.

Refinancing student loans as a retiree

The best approach to deal with your student loans as a pre-retiree or a current retiree depends on what type of loans you have. Federal and private student loans both ease the burden when paying for college, but it's important to note the difference, Federal loans are created by the government with particular terms, and private loans come from banks or other state-based organizations with their own terms.

Private loans can sometimes be deferred until after you complete schooling, and usually require a favorable credit score or a cosigner. Conversely, two types of federal loans – parent and student loans – have payments that can be deferred until the student is finished with school.

Federal parent loans, though, solely place payment responsibilities on parents. These loans require a credit check, while standard federal loans do not. Federal loans come with many borrower protections, too, including flexible payment options. As a result, refinancing federal student loans usually isn't advisable. However, you will want to explore repayment plans and chose one that works for your retirement budget.

If you have private student loans, however, the calculation is a little different. You don't give up borrower benefits by refinancing since your loans are already held by a private lender. You'll simply be refinancing with another private lender. And if you can reduce your interest rate and repayment cost, there's little or no downside to doing so.

Refinancing can help make student loan payoff easier, as reducing your interest rate lowers the cost of borrowing. You can pay off your loans more quickly and easily if you don't owe as much in interest. You may be able to pay them off before retiring, or soon after.

Since refinancing student loans allows you to change your repayment term, you can make the decision to either choose a shorter payoff timeline than your current loans if you want to become debt-free faster or a longer one to drop your monthly payment as much as possible.

Visit Credible today to compare refinance rates and use a student loan refinancing calculator to see how your payment amount could change after refinancing. It's especially important to act quickly to refinance if your monthly payments are so high that you have to withdraw too much from your retirement accounts too quickly in order to cover them.

Federal student loan forgiveness 

President Joe Biden may also take steps to help student loan borrowers, such as forgiving some federal debt. He has the backing of many Democratic politicians, and Sen. Elizabeth Warren (D-Mass.) has made an aggressive push for student debt to be alleviated based on household income.

Canceling student debt, or some form of student loan forgiveness, continues to be a hot topic on both sides of the political aisle. The Biden administration announced in March the suspension of federal loan payments from just over a million borrowers.

"Our goal is to enable these borrowers who are struggling in default to get the same protections previously made available to tens of millions of other borrowers to help weather the uncertainty of the pandemic," Department of Education Secretary Miguel Cardona said in a statement.

Those who have a temporary reprieve on making monthly payments may wish to use this time to pay more toward private loans. Or, you could opt to pay federal loans anyway, with the entire payment going to principal. 


Create a big picture plan for dealing with student loan debt in retirement

Whether you refinance your private student loans or have federal loans to pay, or both, it's helpful to have a plan for when and how to tackle your student debt before or during retirement.

If you aren't yet retired, determine how much you'd have to pay off each month to become free of student debt before leaving work. If you are already retired or can't wait to quit work until your loans are paid in full, make a budget to ensure your retirement funds can cover loan payments. Using Credible’s online student loan calculator can help you estimate the total amount you’ll owe and identify your monthly payment.

Also, consider whether you can reduce the costs of other debts. For example, refinancing your mortgage could potentially lower your monthly housing payment, freeing up extra cash you can use towards paying off your student loans. You can visit Credible to explore mortgage loan refinancing options and see if you could reduce your rate and monthly payment costs.

You don't want your student debt to derail your financial security as a retiree, The sooner you make a plan for lowering your repayment costs and getting your debt paid down, the better off you'll be.  Check your student loan refinance loan rates at Credible today so you can make an informed choice about whether this approach is right for you.

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