Student Loan Stress? These Plans Might Help

Although student loans are usually associated with young people, about 23% of the $1.5 trillion total student loan debt in the United States is owed by people ages 50 and older — and many of these loans are in serious delinquency (90+ days late).1 Older Americans may be carrying loans for their own education, or they may have taken out or co-signed loans for their children or grandchildren.

Due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent executive action, federal student loan payments and interest have been suspended through December 31, 2020. If you or a child carry a federal student loan and anticipate having difficulty restarting payments in 2021, an income-driven repayment plan could ease the burden.Student debt in billions owed by age: 18-24=$340, 30-39=$500, 40-49=$340, 50-59=$230, 60-69=$100, 70+=$20

Payments You Can Afford

The federal government offers four income-driven plans: Pay As You Earn, Revised Pay As You Earn, Income-Based Repayment, and Income-Contingent Repayment. Eligibility and terms of these plans depend on the origination date of the loan and whether it was for undergraduate or graduate education. All four plans are open to borrowers with federal Direct Loans (subsidized or unsubsidized), Graduate PLUS Loans, and Consolidation Loans. Parent PLUS loans are eligible only for the Income Contingent Repayment plan and must be converted first to a Consolidation Loan.

The most favorable terms of these plans allow borrowers who meet income guidelines to pay 10% of their discretionary incomes toward their monthly payments, with any remaining debt forgiven after 20 years of timely payments. Some plans require payments equal to 15% or 20% of discretionary income and/or a repayment period of 25 years.

Calculation of “discretionary income” varies by plan and depends on total income and family size. Payments made under other plans, including the standard 10-year repayment plan, count toward the 20- or 25-year period. Keep in mind that a longer payment period will increase the amount of interest and could increase the total amount repaid. But income-based payment, along with loan forgiveness, might make the loan more manageable while enabling borrowers to meet other financial obligations.

Under any of these plans, borrowers in certain public-service jobs may be able to have their loans forgiven after 10 years under the federal Public Service Loan Forgiveness Program.

For more information on income-driven repayment plans, visit

Wells Fargo Advisors - Wealth Management & Financial Advisors
975 OAK ST, SUITE 1080 Eugene, OR 97401
Phone: (877) 778-9508

Wells Fargo Advisors does not render legal, accounting, or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences. Wells Fargo Advisors did not assist in the preparation of this material, and its accuracy and completeness are not guaranteed.

This information is intended for use only by residents of (AK, AL, AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, MI, MN, MO, MS, MT, NC, NH, NJ, NM, NV, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WV, WY). Securities-related services may not be provided to individuals residing in any state not listed above.

For parties residing outside of the U.S., this information is: (i) provided for informational purposes only, (ii) not and should not be construed in any manner as an offer to participate in any investment or to buy or sell any securities or related financial instruments, and (iii) not and should not be construed in any manner as a public offering of any financial services, securities or related financial instruments.

Products and services listed may not be available, or may have restrictions, depending on client country of residence.

Investment and Insurance Products Are:
  • Not Insured by the FDIC or any Federal Government Agency
  • Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or Any Bank Affiliate
  • Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested

Investment products and services are offered through Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC

A note about Social Media: Opinions, comments and actions taken on Social Media are those of the third party and do not necessarily reflect the views of the creator of this profile or of the firm. Social Media is intended for U.S. residents only and subject to the following terms:

Links to third-party websites are provided for your convenience and information purposes only. Wells Fargo Advisors is not responsible for the information contained on third party websites.

©2021 Wells Fargo Clearing Services, LLC. All rights reserved.