A substantial number of older Americans, particularly those aged 62 and above, are grappling with federal student loan debt, presenting unique financial challenges as they approach or enter retirement. This demographic, often relying on fixed and reduced incomes, finds it difficult to manage these obligations, highlighting a critical need for effective strategies to navigate these financial waters.
As of September 2025, an estimated 3.1 million federal student loan recipients aged 62 or older collectively owe approximately $136.9 billion. This sum represents about 8% of the total outstanding federal student loan debt, which stands at nearly $1.7 trillion. The average debt burden for this older cohort is around $44,161, placing them among the groups with the highest average loan balances.
The journey to repaying student loans later in life is fraught with difficulties. Many borrowers in this age bracket are either nearing retirement or are already retired, subsisting on incomes that are typically lower and more rigid than what they earned during their working years. This financial constraint makes timely loan repayments a significant hurdle.
Recent data from the Federal Reserve Bank of New York indicates that a quarter of borrowers aged 60 or older had past-due payments. The reasons for carrying debt into later life vary; some pursued higher education later in their careers, while others took out Parent PLUS loans to finance their children's or grandchildren's education.
For retired individuals receiving Social Security benefits, the situation can be particularly precarious. Historically, these benefits were at risk of garnishment if borrowers defaulted on their federal student loans. Although the Department of Education has temporarily paused garnishments, beneficiaries who default—defined as failing to make payments for over 270 days—could eventually face deductions of up to 15% from their monthly checks. Such an outcome could severely impact their financial stability.
For those approaching retirement with outstanding student loans, financial experts suggest several courses of action. If feasible, delaying retirement can provide additional time to pay off loans or achieve forgiveness. Engaging in part-time work post-retirement can also help bridge any financial gaps. For individuals unable to work, exploring alternative repayment plans is crucial. Resources like the Federal Student Aid Loan Simulator can assist borrowers in comparing various options, including income-driven repayment plans, which can significantly lower monthly payments. Additionally, borrowers can request a temporary pause in payments through forbearance or deferment from their loan servicers. It is vital to remember that even with garnishments paused, missed payments negatively affect credit scores, making it harder to regain good financial standing. In cases of default, options such as loan consolidation or rehabilitation are available to resolve the default status and resume payments.