Student loans during less active retirement are uncommon but can occur in two scenarios:

1. Existing debt from earlier in life

2. Borrowing to fund grandchildren’s education

 

Key Considerations:

• Personal student debt:

  • Prioritize aggressive repayment; these loans generally cannot be discharged in bankruptcy (with rare exceptions)

  • Federal loans may offer income-driven repayment plans, which can reduce monthly obligations based on retirement income

  • Forgiveness may occur after 20–25 years, but forgiven amounts may be taxable

• Parent PLUS loans for children:

  • Ideally fully repaid before retirement

  • If not, explore consolidation and income-contingent repayment options

• Loans for grandchildren’s education:

  • Generally inadvisable, as retirement security takes precedence

  • Gift only what you can afford without borrowing

  • Explore alternatives such as 529 plan contributions, which grow tax-free for education

  • Ensure the beneficiary has exhausted scholarships, grants, work-study programs, and federal loan options before borrowing

 

Risks:

• Defaulted student loans can result in Social Security benefit garnishment, threatening your basic retirement income

 

Additional Student Loan Resources:​​​

• Income-Driven Repayment (IDR) plans (how payments are set from income) — Federal Student Aid

• Loan consolidation (incl. Parent PLUS consolidation basics) — Federal Student Aid

• 529 plans: Qualified Tuition Programs (tax advantages + rules) — IRS

• Social Security offsets & defaulted student loans (risk to retirement income) — CFPB