THE BLOG

Student Loan Payment Problems & Late in Life Student Loans

02/19/2015 05:50 pm ET | Updated Apr 21, 2015

Question:

Dear Steve,

I have a federal student loan that I haven't been paying on.

My 2014 tax refund has been garnished. Is there any way to get this reversed. If I set up a payment schedule with the US Department of Education C/o Great Lakes Higher Education Guarantee Corp?

Thanks,

Roger

Answer:

Dear Roger,

If your tax refund was intercepted by the Department of the Treasury then you must be significantly behind on your student loan payments.

At this point you are going to have to enter a repayment plan with the Department of Education or even rehabilitate the loan so you can avoid this happening in the future. For more on these repayment programs, click here.

But let's not overlook the most obvious way to avoid a tax refund intercept; don't get a refund. If you adjust your withholding so you breakeven at the end of the year you will put more money in your pocket each month and avoid a future tax refund intercept.

But you will need to enter a repayment plan to deal with delinquent student loan or you may find your wages garnished or even sued by the United States of America.

If you have other debt that is holding you back from making your regular and full student loan payment, talk to a bankruptcy attorney, discharge the other consumer debt and get back to making your student loan payments as soon as possible.

Do you have a credit or debt related question you'd like to ask me? Just click here. I'm happy to help for free.

Question:

Dear Steve,

At the age of 40 I got a AA degree with Federal Student Loans. I do not work in my field of study. I am now 55 and I did miss a few payments after wife got sick and lost job and that chewed up our savings.

I have been paying steady for the last 4 years and paying over each time. The wife is now on disability.

How can I get rid of this debt before I retire at 67.

David

Answer:

Dear David,

Clearly it is time to explore some of the available repayment options that may lower your payment. The Income Based Repayment plans can give you a reduced payment based on your income. The downside to these plans is they will only eliminate your remaining student loans if you make it the full 25 years on the plan. If you did, you'd be 80 years old. For more information on these programs, click here.

The other issue is if you have other consumer debt obligations that are holding you back from being able to afford your federal student loan payment. If so, you may want to seriously consider filing bankruptcy to eliminate your other debt and get back to making the remaining student loan payments.

If you graduated 15 years ago, clearly you are not on the regular 10 year repayment plan. Which one are you on? Or did you miss quite a few years of payments?

The primary focus right now needs to be to either eliminate the student loans quickly or lower the payment knowing you'll probably not live to see the loans forgiven. You absolutely must avoid raiding the limited retirement funds for anything else.

Before I go I wanted to leave you with three easy action items you jump on right now to address your situation. Just click here.

Steve

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States With Highest Average Student Debt - TICAS - Class Of 2012