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When we think about student loan debt, our minds automatically think about millennials. The reality is, it’s not just young adults struggling to pay back their loans. A large number of senior citizens are also fighting with their loans during a time when they should be enjoying retirement. As you can imagine, this debt makes life difficult for all.

The Wall Street Journal released a new report about senior citizens and their student loan debt. This age group owes more than $86 billion! It’s a small chunk of change when compared to the $1.53 trillion of total debt. Yet, we wouldn’t expect seniors to still owe that much and it contributes to the total.

It would appear as if the last decade was tumultuous for everyone, even seniors! Their overall student loan debt grew 161% since 2010. This is the largest increase among any other age group. This type of debt is wreaking havoc on the lives of senior citizens. So, what is happening and why is it hurting the older generation?

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How the Student Loan Debt Crisis Happened

After the 2008 Recession hit, Americans were suffering. Jobs were scarce. Factories were closing at a record rate. People could afford their houses or to pay the bills. More people than ever were on food stamps and receiving government assistance. This disaster also led millions of people to decide to want to do better for themselves.

Going to college and getting a degree appeared to be the only way to find a job that was recession proof. The problem is, a lot of colleges took advantage of the situation. They started putting out false advertisements about their job placement rates. That essentially guaranteed a job if you went to their school.

In order to afford the expensive classes, you had to get yourself deep into student loan debt. And at the time, it was worth it. You got a degree, a guaranteed job, and so the debt wouldn’t be a problem. Except, these students didn’t realize they were being lied to. There was no real job placement guarantee to fall back on.

Sure, a few people found some employment, but the jobs still weren’t there. Many new college graduates with a bachelor’s degree were forced to work minimum wage jobs. That’s all the work that was available to them at the time. Their degree was worthless at helping them solve the situation.

How this Impacted Senior Citizens

You wouldn’t think of too many senior citizens as the generation eager to go to college. Yet, at the time of the economic collapse, most of them were still at a working age. It’s not uncommon for an older person to desire to improve their life. Older generations tend to be passed over to make room for younger employees. That makes having a degree worthwhile.

But the main reason why they got caught up in this mess wasn’t necessarily because they went to college. It’s because they helped their children and grandchildren. They became victims of student loan debt just by co-signing loans. When their kids got caught up in the scams and couldn’t pay, the banks went after the co-signers.

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In 2015, over 40,000 senior citizens were forced to hand over Social Security checks and other benefits because the defaulted. All their money, including any tax refunds, went towards their student loan debt. This is a 362% increase in the last decade. It just goes to show how deep this crisis has become.

You’ve probably read all the scary headlines. They bemoaned the fact that 99.5% of all people who applied for student loan forgiveness were rejected. They even tried to make it into a political stunt, suing the government. But the reality is, those people didn’t read the fine print. There are valid reasons why those people were rejected.

Signed into law by President Obama, the Public Service Loan Forgiveness law offers full student loan forgiveness to those who qualify. To qualify, they have to make 120 on-time payments while being employed full-time by a public service job. It sounds easy enough, but too many people applied believing they qualified for the program.

Except, it’s not enough to just say you work a public service job. Again, it’s all about the fine print. For example, you can work in a non-profit but still be employed by a private company. That would disqualify you for student loan forgiveness. There was a teacher who thought she qualified, but her district was controlled by a private company and it disqualified her.

What matters here is who your employer is, not the role that you play within the company. You can still be doing public service work, but be employed privately. That means only 300 of the 73,600 applicants actually received student loan forgiveness. In order to receive a full pardon from your federal student loan, there are ways to ensure it gets done.

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How to Make Sure You Get Full Student Loan Forgiveness

If you’re not sure if you qualify for student loan forgiveness, there are several things you can do. In fact, you should do these things even if you’re certain you qualify. There may be a circumstance you don’t realize. You don’t want to wait until the end of your 120 payments only to find out you didn’t fully qualify.

Here are three things you can do to prevent getting rejected:

1) Complete the Employment Certification Form

This is the best thing you can do to ensure you qualify for student loan forgiveness. When you take this step, you’ll know whether your employment is actually considered public service. Again, if your employer is a privately-owned company, you will not qualify. You shouldn’t just send it once, either.

This form should be submitted:
• When you begin your public service work
• When you switch employers
• Every year

2) Check your Employment Certification Form for Errors

This is another major issue people were coming across. It was found that many were filling out their forms incorrectly and were denied student loan forgiveness. Issues included:

• Mismatched information
• Missing information
• Not completing all required fields
• Correcting errors, but not initialing corrected errors
• Failing to get authorized signature from your employer

3) Failing to Enroll in an Income-Driven Repayment Plan

In order to receive student loan forgiveness, you have to enroll in a repayment plan. Only people with federal student loans can get their loans forgiven, so it would require you to ensure you’re eligible. You can choose the best repayment plan that works for you and your budget.

4) Failing to Re-certify Your Income Yearly

Because you have to enroll in an income-driven repayment plan, you have to certify your income. The government wants to make sure you still qualify and your repayment plan will depend on what you make. By not certifying, you can be denied student loan forgiveness.

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The process can be tricky, but as long as you follow these steps and stay on top of it, you will be good to go. Be sure to contact Financial Helpers if you have any questions.

Throughout their schooling years, most kids have big dreams about their career. Maybe they want to follow in their parent’s footsteps or branch out into adventures of their own. Either way, from the moment they start high school, the prep for college begins. It’s almost expected, but not many teens are prepared for student loan debt.

Going to college is an automatic decision many families make. But do they really sit around and plan a budget? Not really. Many parents even co-sign without realizing what they’re getting themselves into. You would think that once the student graduates, a good paying job will be there to cover student loan debt payments.

That’s not always the case. All you have to do is look at the crazy numbers associated with student loan debt. Many students even graduate and begin to regret taking the path they did. They didn’t prepare or plan for what comes next after college. They just assumed that everything will be fine.

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Scary Student Loan Debt Statistics

In the United States, there are over 44 million people suffering under the burden of student loan debt. Collectively, they owe over $1.53 trillion dollars, a number that continues to climb with each passing year. The average amount of debt each student has is around $37,000. This is a lot of debt to be carrying around at the prime of someone’s life.

That’s why 20% of the average millennial’s income is spent on their student loan debt payments. That’s a huge chunk of money that is causing them to miss out on a lot of other milestones. Reports are being released regularly now showing the economic impact student loan debt is having on this generation.

Millennials are waiting longer to get married, have kids, buy a home, and more. Even worse is the fact that they’re not saving money for retirement or buying health insurance. Their student loan debt is sapping any available money from their purses and wallets. That can put them in a dangerous position.

Student loan debt can wreck their credit and stick with them for decades after they graduate. This type of debt shackles itself to the student and won’t let go until it’s completely paid off. You can’t just declare bankruptcy or wait for it to fall off your credit report. This is definitely a sticking point every parent should discuss with their teen.

Teach them About Smart Financial Choices

The worst thing a parent can do is assume that getting into student loan debt is the best option for paying for college. It’s not. Plan for college ahead of time by applying for as many scholarships as possible. Get a part-time job and start saving money years ahead of time. Help them understand the type of commitment a student loan requires.

Federal loans are the best to take out because they’re protected. The government also offers loan forgiveness for public service workers and repayment plans. The problem with federal loans is there is a cap on how much you can take out. This is why a plan needs to be created before they graduate high school.

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One great strategy is deciding to start paying back the loan while still in college. That’s four years you can get ahead of it. Don’t push it off until after you graduate. Any little bit you can pay ahead of time will benefit you greatly. Another strategy is not using every dime you receive. Perhaps stay close to home and save big on housing costs.

Your teenager may also assume that you’ll be helping them pay for college. Perhaps you will, but a lot of the slack will fall on their shoulders. If you co-sign and they don’t pay, it will leave you in a lot of trouble. You’ll be responsible for the loan. In the end, preparing for this massive undertaking ahead of time will make it much easier to deal with after graduation.

Paying for college is one of the largest investments people will make in their lifetime. Depending on the type of degree, you can spend the next decade or longer paying it off. It almost seems as if the cost of a college education goes up every single year. With that rising price comes more difficulty and people who cannot afford their student loans.

Despite the massive expense, there are a number of ways that the poorest Americans can get assistance. There scholarships, grants, and financial aid, as well as federal student loans. But it’s not just tuition that’s expensive. Books and other needs are becoming more expensive as well. You never have to expect to pay hundreds of dollars for a single textbook, yet that’s what they cost.

There are other things as well, like housing, food, and transportation. Short of working a full-time job as well as taking a full load of classes, it can be an expensive time. To bridge the gap, a lot of people take out private loans. These are loans that are there when you need them, but can have significant drawbacks if you’re not careful.

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Private vs. Federal Student Loans

There are two different types of loans you can get to help pay for college. The first is a federal loan. These are loans that are issued through the United States Department of Education. These types of loans are the most popular as they have some backing by the federal government. To receive a federal loan, you have to fill out a FAFSA application every year.

Private loans are offered through banks and other individual private financial institutions. The difference between the two can be how they’re issued. For example, to get a federal student loan you don’t need to have a top credit score. Interest rates and fees are all set by the government and can change from year-to-year. Private loans are different.

“Private loans are simply loans from private lenders — such as banks — that can be used to pay educational expenses,” says Ryan W. McMaken, communications director and economist for the Mises Institute.

And because private student loans require a good credit score, most young people would need to get a cosigner. There are different requirements for each institution, the private student loans do not get automatically issued like federal loans. If you don’t get a cosigner, you most likely won’t get a private loan.

The Pros and Cons of a Private Student Loan

Let’s start with the advantages. You may need to pull out a private student loan if you hit the cap for federal student loans. There’s only so much you can take out each year in a federal loan. So, if you need more money, you have the option to get a private loan to fill in the costs. Interest rates are also typically lower as well.

“Many (students) take out private student loans when they will still struggle to pay their tuition even after federal student loans,” says Leslie Tayne, debt resolution attorney, best-selling author and founder of Tayne Law Group.

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There are several cons with private student loans. Because good credit is required, that means someone will most likely have to cosign for you. That can put the person in risk, especially if you have a lot of debt to pay off. If you default or can’t pay back your student loans, it’s going to hurt the person who helped you.

Even if you can swing a loan without help, unless you have a perfect credit score, you will be slammed with high interest. It’s hard to get qualified through without stable income and decent credit history. That means your interest rate will likely be in the double digits and higher than federal borrowers.

Also, unlike federal borrowers, there are no forgiveness or repayment plans to help out. Your private loan is not protected by the government.

A few days ago, the Federal Reserve revealed that student loan debt has been hurting the national homeownership rate. This is a new problem, as the homeownership rate has been dropping considerably since 2005. A lot of this has to do with the lack of young people buying homes. This correlates with the amount of student loan debt that they have.

A lot of it has to do with the great recession. Millennials saw what their parents had to deal with. Many Americans were near to having their homes foreclosed upon. As this generation grew up over the last decade, they developed little faith in the housing market. They don’t see homeownership as the investment our parents and grandparents did.

And still, a major part of this student loan debt. When you have $50,000 worth of debt, you’d be hard-pressed to get accepted for a mortgage. We reported previously that as many as 400,000 young adults were unable to buy a home. That’s because of the mountain of student loan debt in their possession.

It can take a decade or longer to pay off that much debt. As student debt continues to spike, homeownership rates have fallen. The average student loan debt per capita among 24-34-year-olds has doubled. Yet, the percentage of adults in that same age range who owns a home has fallen steeply from 45% to 36%.

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The Burden of Student Loan Debt

Because more people are spending more money on student loan debt, it’s having economic repercussions across the spectrum. The Fed is beginning to report on an increasing number of economic challenges as a result of this problem. When you’re spending your money on debt, you don’t have anything extra.

“We estimate that roughly 20 percent of the decline in homeownership among young adults can be attributed to their increased student loan debts since 2005,” said report authors Alvaro Mezza, Daniel Ringo, and Kamila Sommer of the Federal Reserve.

The report also revealed that every $1,000 the cost of education goes up, there’s a 1%-2% drop in their likelihood of owning a home. That’s a major problem. Maryland Senator Chris Van Hollen is one lawmaker constantly speaking out against this crisis.

“Student loans impair their financial mobility — often preventing them from buying a home or putting away savings,” said Van Hollen.

More than Just Debt

The student loan debt problem goes way beyond just being a vacuum, sucking up every last dollar. No, it also pushes down credit scores. A lower credit score will prevent anyone from buying a home, leasing a vehicle, and more.

According to the Fed report: “Increased student loan debt causes borrowers to be more likely to default on their student loan debt, which has a major adverse effect on their credit scores, thereby impacting their ability to qualify for a mortgage.”

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“We must address this growing problem,” Van Hollen said. “That’s why I support efforts to allow students to refinance their loans to lower rates, improve implementation of the Public Service Loan Forgiveness program, and increase the Pell grant to cover more college costs.”

This is a major crisis that will only continue to grow. Colleges do not seem to care about the rising cost of an education. Lawmakers seem to only pretend to be concerned. Regardless of which party is in power, very little is done to combat the problem. Until someone steps up, student loan debt will continue to cripple the economy.

If you’re a government worker, you’re probably a bit worried right now. As we currently wade through the longest government shutdown in history, there are no answers in sight. As another day comes in goes, government workers remain unsure how they’re going pay their bills. Rent, utilities, and even their student loan debt payments are in limbo.

We’ve rallied on here many times at Financial Helpers about making your monthly payments on time. Becoming delinquent on your student loan debt is a dangerous game you don’t want to play. As a service worker and federal employee, that’s even truer. You have to stick to the plan to receive full student loan forgiveness.

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But, when do you do when the government shuts down, a situation completely outside of your control? It’s understandable that you’re going to fall behind on your payments, but there are other things you can do. Here are three steps you can take to show you’re trying to remain current on your student loan debt:

Step One: Remain Proactive about Your Student Loan Debt

Your student loan servicer has millions of people like you they’re trying to keep track of. You know your situation, but they may not. Do not just assume they know you’re a government worker. There are a number of mortgage, credit card, and student loan debt companies out there right now offering relief assistance.

By not saying anything and ignoring the situation, you could be setting yourself up for disaster. Always keep in touch with your servicer and relay any financial hardship you might be facing. More often than not, they will do what they can to help you. By not being proactive, your servicer probably won’t know about your situation.

Step Two: Review Your Federal Student Loan Options for Repayment

This goes along with step one. You have to remain proactive! Most people with student loan debt have the option of filing for a deferment or forbearance. There are several types of programs that can allow you to push off payments for a few months. To find the right one, you have to stay in contact with her servicer.

These options will give you a much-needed break from making student loan debt payments while furloughed. Still, this might not be the best option for you. While monthly payments are put off a few months, interest can still continue to pile on. That means even while furloughed, your total amount due can still continue to grow.

Step Three: Consider Other Repayment Options

It’s understandable that you’d rather put off making payments until your paychecks start coming back. You have other bills to pay that are more important to your survival. But, if you can swing it, the best option may be to continue making payments towards your student loan debt.

So, while going into deferment or forbearance might seem like a good idea, there are better options. Especially if you’re working towards Public Service Loan Forgiveness. A forbearance would not meet making qualified payments, so it would extend what you have to pay. You may find the benefits of an income-driven repayment plan better suited to your needs.

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You might even find a bank or credit union that offers interest-free loans that can help in an emergency. This loan would help fill in the gaps while you wait for the government to reopen. Yes, that means you’d have another loan to pay. But, since you’ll be getting back pay, you can use that money to pay back the loan.

Either way, call your servicer and discuss all options open to you! That’s the best course of action during this trying time.

Americans suffering under their student loan debt could be about to lose a major tax break. Currently, you can deduct up to $2,500 in student loan interest from your taxes. This has provided some help to former students digging their way out of the crisis. Sadly, this deductible could be on its way out the door if Republicans get their way.

There are 12.2 million U.S. taxpayers who took advantage of this deduction in 2015. Education advocates are frustrated by the move, saying they believe it will just make the cost of college that much more expensive. On the other hand, Republicans defended their bill claiming the loss will be offset by other benefits in the bill.

The American Council of Education is fighting back. They wrote a letter to the House Ways and Means Committee. This is the group responsible for writing the tax laws.

“It is possible to offer tax relief to hard-working middle-class and lower-income Americans in a way that does not increase college costs and does not make a quality higher education less accessible,” ACE President Ted Mitchell wrote in the letter Monday. “We are eager to work with Congress to enact such legislation, but this bill heads in the wrong direction.”

Justin Draeger, the president of the National Association of Student Financial Aid Administrators, agrees. “It’s going to make student loan borrowing more expensive and as a consequence make higher education more expensive,” he said. The Republicans don’t agree with this sentiment.

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Cutting Taxes for Everyone?

The Republicans aren’t taking the opposition of their bill lightly. In fact, they don’t think the $2,500 student loan interest deductible did much at all. While that seems like a big number, the average tax reduction was just $200. Jason Delisle, a conservative who works for the American Enterprise Institute, says the tax bill will help.

“So, if you thought that the student loan interest deduction was good, this bill gives it to everybody and then some,” said Delisle. “They are cutting people’s taxes.” This bill is looking to double the standard deduction to $12,000 for individuals. Couples would receive a $24,000 deduction.

Student Loan Debt a Growing Problem

Student loan debt has skyrocketed in the past decade. Over 44 million Americans owe $1.53 trillion worth of debt. People everywhere are begging the government for some help. This amount of debt ranks #2 compared to all other types. Only mortgage debt is higher. With so many people struggling, this is a crisis that will soon impact the economy.

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Many experts already are blaming millennials for harming the economy. They’re broke thanks to high amounts of student loan debt, so it’s forcing them to put off major life decision. Any kind of break the government can give them in the form of tax relief will be beneficial. Short of working in a service-related industry, there is very little help out there.