Arizona Retirees Owe $96,000 in Student Loans: ‘Don’t Know What Happened’

As President Joe Biden promises more loan forgiveness in the coming months, one retired couple is facing down nearly $100,000 in student debt, and they’re not sure they’ll ever be able to pay it off.

Albert Martinez, a former lineman living in Arizona, decided to take out a parent student loan in 2010. He was working at the time and wanted to help his two sons pay for college.

More than one decade later, the loans are a $96,000 weight on his and his wife Jil’s backs, especially as they live on fixed retirement incomes.

Albert initially retired in 2018 at the age of 58 after around 40 years of serving the AT&T company.

“It was a blessing since the work was taking a significant toll on him physically, but he never wanted to retire that early,” Jil told Newsweek. “Here we are in 2024, both retired on fixed incomes with an outstanding student loan of $96,000 at 8 percent interest.”

While Jil says they’ve applied for all the current programs available to reduce interest or costs, most have denied them based on their income level.

“He didn’t expect the loan would’ve ballooned and will continue to balloon,” Jil said. “We don’t know what happened. We feel our country is just taking advantage of us.”

The Martinezes were able to get payments lowered from $1,000 a month to $638, but even that reduced payment is a hardship as the couple works to make their dollar stretch in the current economy.

“Having to retire young of course means that our money has to last longer and it’s fully our intent to pay this loan off,” Jil said. “Albert is not looking for handouts. He would just like to see the interest rate lowered to make it easier to pay down the loan.”

Today, both Jil and Albert have taken on part-time jobs just to stay on top of the payments, but they don’t have much hope it will ever be enough to get the near $100,000 loan down to zero.

“He will never be able to pay off this loan,” Jil said. “It just is not possible.”

Still, the Martinezes’ situation is not unique among retirees, who are increasingly finding their golden years might include monthly loan payments for their or their children’s student debt.

“Retirees with student debt are more common than most would believe and, unfortunately, it’s going to get even more frequent,” Alex Beene, a financial literary instructor for the state of Tennessee, told Newsweek.

Over the last 30 years, both young undergraduates and returning professionals saw the price of their degrees skyrocket, Beene added.

“The result is we are going to have record numbers of Americans entering retirement with student loan debt still owed,” Beene said.

Still, many can’t or don’t want to forego retirement even while student loan debt hangs over their shoulders. Part-time work is one option, but even that often can’t keep up with the interest rates.

“While this situation isn’t ideal, the harsh truth is this debt isn’t going away, and the retirees encountering it are going to have to manage what’s left for them to pay,” Beene said.

For those who took on Parent PLUS loans, the implications of their debt can be even more troubling, as this is one borrower group that has been left out of national forgiveness programs and has some of the highest interest rates.

“Most parents were pulled into getting Parent PLUS loans, but the thing with these loans is that the same financial assessment that you would have in other loans, you don’t see for Parent PLUS/private loans,” Nadia Vanderhall, a financial planner at The Brands and Bands Strategy Group, told Newsweek. “This allowed them to borrow excessive amounts without sufficient assessment of their repayment ability.”

And as many parents enter retirement, they no longer have the funds they once did to make those monthly payments on the loan.

Currently, Parent PLUS loans still have some of the highest interest rates around, and borrowers over 50 with significant amounts of student debt are one of the fastest-growing student loan groups.

According to Value Penguin, student loan debt for those 60 and older surged 1,256 percent since 2004, when that age group only had $6.3 billion in student debt.

“The income that they first had when they obtained their loans is not the same income that they may have in retirement,” Vanderhall said. “Most rely on Social Security and fixed income isn’t the same as what was able to pay those loans in the early part of opening the loan account. If retirees have medical costs, this would make it hard for them to see their golden years as golden due to still carrying those loans down the yellow brick road.”

Debt Forgiveness

So far, thousands of borrowers have seen their debt forgiven under Biden’s new loan adjustments. Recently, the president announced 74,000 more borrowers would see $5 billion extra in relief. This included more than 40,000 people working in public service and borrowers who made at least 20 years of payments on their income-driven repayment plans.

“My administration is able to deliver relief to these borrowers—and millions more—because of fixes we made to broken student loan programs that were preventing borrowers from getting relief they were entitled to under the law,” Biden said in a statement.

Since student loan payments resumed in October after a multi-year pandemic pause, many borrowers have been struggling to make their payments. In all, the nationwide student debt stands at 1.75 trillion and does not look to be decreasing anytime soon.

For the Martinez family, though, Jil said they hope others can learn from their decisions.

“Do not take out parent student loans, or any others for that matter,” Jil said. “It’s a money making scam.”

If you would like to share your experience with Parent PLUS or other student loans, please contact us at [email protected].