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In Spanish | Young people launching their careers may be the flagship children of college debt, but a growing percentage of older Americans are bogged down by student loans.

Of the $ 1.6 trillion in student debt owed by Americans in 2020, people 50 and over were about $ 340 billion, up from $ 47.3 billion in 2004, according to the Federal Reserve Bank of New York. .

Such financial obligations can put the brakes on retirement savings, says Ben Reynolds, founder of “Sure Dividend,” a newsletter for long-term investors. “People nearing retirement or retirement who aren’t bothered by student loans don’t have the burden of maintaining those monthly payments, freeing up more money for retirement accounts and investments,” says Reynolds .

One way to alleviate some of the burden is to use the Public Service Loan Cancellation Program (PSLF), which allows borrowers who work in public sector jobs – such as government, public education and law enforcement – to have their loans in arrears after making 10 years of payments. Here’s what you need to know to take advantage of the civil service loan forgiveness.

Understand the requirements

In order to qualify for a student loan forgiveness, you are required to make 120 qualifying payments on time, which means the payment must equal the total monthly amount due and paid within 15 days of the due date. Payments do not need to be consecutive; for example, you can suspend payments through a deferment or forbearance and still be eligible for the remission.

While you typically won’t get credit for months without making a payment, this is not the case during the pandemic. To provide relief to borrowers during the COVID-19 crisis, payments and interest on student loans have been suspended until September 30. However, these months will count towards the PSLF even if you don’t pay a dime.

You will also need to have an income-based repayment plan – a plan in which your monthly payment is determined based on the amount of money you earn. However, if some of your payments were not made under a qualifying plan, you may still be able to get your loans canceled, through an extension of the program called the Temporary Loan Waiver Program. of public service (PSLF), adopted by Congress in 2018.


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