Retired grandmother still owes $108,000 in student debt 40 years after loan

Nancy Peter, who aspired to become a psychologist nearly four decades ago, is today emblematic of a persistent issue facing many Americans — student loan debt.

Despite completing her degree at Mundelein College and a subsequent graduate program at Loyola University, Mrs. Peter‘s financial burden has multiplied due to accruing interest.

When she borrowed the money, she had planned to pay it back quickly, the now 71-year-old retired therapist and grandmother told WGN-TV. That didn’t work out.

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“The interest compounds and compounds, so every penny I don’t pay, it goes sky high,” she said.

Originally borrowing what a manageable sum to finance her education was, Mrs. Peter now finds herself owing roughly $108,000 — a sum triple the initial loan amount. With a career spanning nearly four decades, the stark reality of her financial situation is all too clear as she navigates her retirement years.

“This will sound terrible,” Mrs. Peter said, “but I have a paper [on] different ways you can have your loan forgiven, and the only one I fit into was I would have to die.”

Mrs. Peter‘s story sheds light on the plight of borrowers enrolled in income-driven repayment plans, designed to base monthly payments on an individual’s income. In some cases, these payments don’t cover the interest, causing the debt to increase despite ongoing efforts to pay it down.

Complications arose for Mrs. Peter when she faced health concerns that necessitated a temporary pause in loan repayments, known as forbearance. During this period, while payments halted, the interest continued to accrue, substantially elevating her debt.

“That happens all the time, and it’s really important for borrowers to understand that when you take out loans, pretty much any type of private loan or federal student loan, interest usually starts to accrue immediately,” said Rae Kaplan, a Chicago-based student loan attorney working to help borrowers ease debt, the station reported. “So, as soon as the loan is disbursed, it starts accruing interest.”