One boomer had $182,000 in student loan forgiveness; It can save for retirement

Interest still accrued during that time, causing his balance to grow — and as of 2023, it was $182,000, according to documents reviewed by Business Insider. While Larry remained consistent with each monthly payment after coming out of forbearance, it affected his ability to afford other key expenses and he was unable to put money toward retirement.

“For years, I didn’t have health insurance because health insurance was about the same price as paying off a student loan,” Larry told BI. “I had to use all the savings I had to make sure the student loan was paid off first because I didn’t want to go into my credit report.”

Larry’s job brings him a five-figure income, and while he loves his work and finds it fulfilling, he’s struggled to balance his student loan payments with his other daily expenses. He also said he doesn’t want to fall behind on his payments because it could jeopardize his law practice.

His financial trajectory completely changed on October 6, 2023, when he received an email from his administrator with the subject line: “Your student loans have been forgiven.” The relief was the result of President Joe Biden’s one-time account adjustments for borrowers with income-driven repayment plans who have made payments for at least 20 years and qualified for forgiveness.

“I almost passed out in my office,” Larry said, recalling when he got that email. “I mean, I couldn’t even breathe. I didn’t work the rest of the day. It was like euphoria. I couldn’t believe it.”

Larry is among the millions of student loan borrowers over the past few years who have received loan forgiveness through Biden’s targeted relief efforts. The Department of Education said it expects to complete its account adjustments in September to bring borrowers with income-based repayment plans and Public Service Loan Forgiveness on track with their payments.

Along with the loan forgiveness, Larry also received an $1,800 refund for overpayments on his loans, which he said he used to pay a medical bill and make spa reservations for himself and his wife.

“What I’ve been able to do now is put some money away,” Larry said. “I wouldn’t have this huge note hanging over my head anymore.”

“I couldn’t save money”

Larry is not alone – a growing number of older adults are entering retirement with student debt. According to a recent report by the New Schools’ Schwartz Center for Economic Policy Analysis, more than one million Americans between the ages of 55 and 64 have student loans or spouses with debt.

While making his payments over the past decade, Larry said that along with skipping out on health insurance, he sometimes had to borrow gas money to get to labor court — and while he was forced to downsize workload due to diabetes diagnosis. , he could not retire because he had no savings.

“There were office expenses, bar fees, car expenses, everything would cost money,” Larry said. “So we couldn’t save money.”

Many Republican lawmakers have criticized student loan forgiveness because it benefits people who are believed to have high salaries, such as doctors and lawyers. GOP Sen. Tom Cotton, for example, he wrote on X, after the Supreme Court rejected Biden’s first attempt at broad debt cancellation, saying that “Biden’s student loan transfer scheme required millions of Arkansans to pay off the loans of wealthy doctors and lawyers.”

However, having a degree in law or medicine does not always mean a high salary. It was worth it for Larry, despite the financial challenges, and he is grateful to be able to enjoy the rest of his career and retire without a student loan balance.

“We don’t always make six figures,” Larry said. “We’re window lawyers, family lawyers, prosecutors, public defenders, government attorneys. My career has been wonderful. I’ve been able to practice what I want and how I want and make decisions about my career trajectory.”

Have you received student loan forgiveness? Struggling with student loans? Share your story with this reporter at [email protected].