WHAT COULD THE STUDENT SECURITY ACT MEAN FOR YOU?
The Student Security Act is new bill that has been proposed in Congress to allow Americans to receive student loan forgiveness in exchange for delaying their Social Security benefits.
We serve many clients struggling with student loan debt, and want to explain the potential benefits and risks to you of this proposed legislation.
The Student Security Act proposes to give $550 in student loan forgiveness in exchange for raising a person’s full retirement age for Social Security benefits by one month. The total amount of forgiveness is capped at $40,150, which would mean delaying full retirement age by 6 years and 1 month.
The Student Security Act would be voluntary; it would not impact full retirement age or Social Security benefits for people who choose not to participate.
Right now, the full retirement age for people born after 1960 is age 67. You can choose to receive Social Security retirement benefits as early as age 62, but if you do, the payments will be smaller. A person participating in the Student Security Act who took the full amount of forgiveness would have their full retirement age raised to age 73 and 1 month. They would not be able to start claiming reduced retirement benefits until age 68 and 1 month.
The Student Security Act has an obvious benefit, which is student loan forgiveness of up to $40,150. It could provide relief from stress and allow participants to focus on building their careers and personal retirement savings.
The risk is that participants could be trading one problem for another. Instead of struggling to pay student loans now, participants may have to struggle to pay their living expenses in the future. Having to work an extra 6 years before retiring may not be as easy in the future as it seems in the present, depending on your health and many other factors.
This bill has not yet been made into law, and it must still go through the usual processes before it could be passed. Consider carefully before participating in the Student Security Act if it does become law.