NEW REPORT: Parents and grandparents struggling with student loan repayment

Thursday, January 05, 2017


Student loans make up the nation’s second largest consumer debt market and seniors are the fastest growing segment of this market. The Consumer Financial Protection Bureau (CFPB) released a Snapshot of Older Consumers and Student Loan Debt that describes these trends and takes a closer look at the complaints that older borrowers (aged 60+) have submitted to the CFPB about the challenges they face with federal and/or private student loans. The CFPB’s analysis of its complaint data reveals that about three-out-of-four of these borrowers used student loans to finance their children’s or grandchildren’s college education. According to the report, problems arise for these borrowers when, among other things, they co-sign a private student loan or attempt to access the protections guaranteed under federal law for many private-loan borrowers.

The CFPB recommends tips to help older borrowers navigate these challenges:

1. Struggling federal student loan borrowers have the right to apply, for free, for a repayment plan that can lower your monthly payment based on your income. To start making payments under an income-driven repayment (IDR) plan, enroll online at You may also contact your student loan servicer directly about enrolling. You will be required to submit proof of your income, such as a tax return, pay stub, or a benefits check, to determine your payment. IDR plans are not common with private student loans, but ask your loan servicer if any other repayment options are available to you.

2. As a private student loan co-signer, you may request access to account information, even if you’re not the primary loan borrower. The report finds that many older co-signers complain that despite remaining financially responsible for the co-signed loan, student loan servicers do not provide them full access to loan information, preventing them from being able to pay off a loan in full or determine an outstanding loan balance. If you’re a co-signer, missed payments can negatively affect your credit. You may always request access to all account and repayment information to help you make informed financial decisions about the loan and protect your credit. Learn more co-signer release options in the CFPB’s consumer advisory notice.

3. Debt collectors cannot garnish protected benefits, such as Social Security benefits, in order to repay a private student loan (but Social Security can be garnished to repay defaulted federal student loans). Social Security benefits are protected from being garnished to repay delinquent or defaulted private student loans. Complaints submitted to the CFPB indicate that older borrowers may be subject to harassing collection tactics and threats when the primary borrower fails to pay. Your Social Security benefit may only be garnished to pay back an outstanding debt to the U.S. government, like a federal student loan.

Borrowers experiencing problems related to repaying their federal or private student loans or debt collection can submit a complaint online to the CFPB or by calling (855) 411-2372 (M-F, 8am-8pm EST).

Finally, student loan borrowers can get advice on student loan repayment options by using the CFPB’s “Repay Student Debt” tool. This interactive resource offers a step-by-step guide to navigate borrowers through their repayment options and is especially helpful when a borrower is facing default.



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