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Social Worker Facing Retirement Can’t Pay Student Loans

Written by Steve Rhode


Dear Steve,

I’m a 60 year old female with one daughter in college. I took out loans to get my MSW degree which I needed to continue working in my job.

I took loans totaling $50000, but during this time I went through a divorce, was jobless for 2 years, and I defaulted on the loan. I did consolidate my loans.

The lender, Dept of Education, could not give me a repayment plan that i can afford to pay so after a few months they started garnishing my wages. By this time I was employed.

I was able to negotiate a “rehabilitation” of the loan in which i was required to pay $5 a month for 9 months. I received the new repayment amount and it was $540 a month which I cannot afford. I renegotiated it down to $302 a month which is still more than I can pay comfortably.

Plus the amount goes up every 24 months. Next amount will be $326.00. I’m near retirement and afraid of this mess and how it will affect my quality of life. The loan amount is up to $8900 0 with accrued interest.

Can part or all of the loan be discharged through bankruptcy? If I default while retired will my Social Security income be garnished? Is there anything else I can do? I can pay $150 with little hardship but more is a big hardship.



Dear Susan,

Congratulations on rehabilitating your loan. Good job on that. But it does not sound as if you got in to an income based repayment program. With the payment increase it sounds more like a graduated repayment plan. Considering you are nearing retirement, that’s not what you want.

For more information on the income based repayment programs, click here.

If your loans end up in default, your Social Security benefits can be garnished for payment. However, there is a process to deal with a Social Security wage garnishment, click here.

Is it possible to discharge your loans in bankruptcy, might be, but you would have to find a bankruptcy who would be willing to file an adversary proceeding and fight the case the loans create an undue hardship.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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