Can we retire in 6 months due to $ 190K student loan debt?


Dear Penny,

I’m in big trouble. My husband and I have a total student loan debt of $ 190,000 and were planning to retire in six months.

My husband wants to sell our house and pay off the debt. If we do this, we won’t have a lot of money for the down payment on another home, so we won’t have low mortgage payments. If we don’t sell, we can afford student loan payments. But we will be very limited, and we will have no money to spare for emergencies.

Help. I have been trying many sleepless nights to find the best solution.


Dear H.,

If you could seriously affect your balance after working for another year or two, this is worth considering seriously. But actually $ 190,000 is a lot of money. Delaying retirement by a couple of years may not be enough to make significant progress.

About 20 percent federal student loan debt conducted by people aged 50 and over. Telling millions of people, like you and your husband, that they have to work forever is simply not a viable solution.

I reached out to Betsy Mayotte, president and founder of a nonprofit organization. Institute of Credit Counselors for Studentsto discuss strategies for people approaching retirement with heavy student loan balances. She has advised thousands of student loan borrowers on how best to deal with their debts. She highlighted how common your dilemma is.

Robin Hartill
Robin Hartil [ The Penny Hoarder ]

“I think a lot of people don’t understand that student loan debt is no longer just a problem for young people,” Mayotte said. “I get questions like this all the time.”

The options available depend on several factors. First of all, is it federal loans, private loans, or a combination of both? Second, if you have federal loans, is it debt from your own education, or did you take out Parent PLUS loans for your children? While many baby boomers are in debt because they paid for their children’s education, many have loans because they returned to school during the Great Recession, Mayotte said.

It is only on rare occasions that student loans are repayable in the event of bankruptcy. You probably won’t be a good candidate for bankruptcy because it looks like you have a decent net worth.

Unfortunately, if you have private loans, there are no great relief options. Selling a home and downsizing so you can pay off your balance, or at least most of it to make your payments more affordable, may be your best option.

But if you have federal loans, you have several options. Instead of paying off your loans, the best alternative may be to pay as low a monthly payment as possible, even if that means you will never completely get out of debt.

If you have federal loans, including Parent PLUS loans, Mayotte suggests looking into a program called income-based repayment. To register, you need to combine your loans. The advantage is that your payment will be 20 percent of your disposable income, which is expected to be lower when you retire.

“They reapply every year, and if their income goes down, payments go down,” Mayotte said. “If their incomes increase, payments increase. If they still have a balance after 25 years, the balance is forgiven. “

You have even more options if you have federal loans you borrowed for yourself, including income-based repayment, Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). These programs pay off the loan between 10 and 15 percent of your discretionary income and also offer forgiveness at the end of the repayment period, which is 20 to 25 years.

Traditionally, the write-off balance for all of the federal student loan programs I mentioned was treated as taxable income for the year the debt was written off. But thanks to the COVID-19 response, any balance forgiven by 2025 is not treated as taxable income. Moyette won’t be surprised if Congress eventually extends the tax break. But if you choose to enroll in a program that offers forgiveness, it suggests preparing for the worst, but hoping for the best, since 20-25 is a long way off.

If you have incurred any of this debt for your children, it may be time to step outside of the relief programs and ask your children if they can help you with your payments. “It’s a tricky conversation, but sometimes it’s necessary,” Moyette said.

If you have the option to lower your monthly payments, it really depends on your personal preference. If you think you’re better off sleeping knowing that this balance isn’t hanging over you, it might be better to downsize and pay off, even if it requires paying off your mortgage.

But there is nothing wrong with treating this debt as a chronic disease that is incurable but can still be dealt with. If you can come to terms with carrying this debt and you can limit the damage to your monthly pension budget, this might be your best option.

Robin Hartil is a Certified Financial Planner and Senior Writer at Penny Hoarder. Send your tricky money questions to

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