At 68 years old, she owns her home. She owns her car. She has no credit cards. No personal loans. No mortgage.

Her only debt is a $40,000 Parent PLUS student loan she took out for her daughter, who never finished college.

In a call to “The Ramsey Show,” Pat asked if cashing out her entire retirement account to erase the debt made sense.

A Late-Life Debt With No Easy Exit

“I’m 68 years old,” Pat said. “I have a $40,000 student loan debt for my daughter and the only retirement amount I have is $37,000 in an IRA.”

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She is still working and earning about $78,000 a year. She recently started collecting $2,000 a month in Social Security. But that $37,000 IRA is all she has saved for retirement.

The loan is a Parent PLUS loan in her name, with a 7.9% interest rate. “The daily interest is almost $7 a day,” she said.

Her daughter never finished school and is now a stay-at-home mom with two young children. “She doesn’t have the money,” Pat said. Her son-in-law works “on and off.”

Co-host George Kamel was frank. “These Parent PLUS loans really are becoming like a cancer on society,” he said, noting how often they “destroy” family relationships.

Right now, she is contributing 25% of her income to her IRA and putting $600 a month toward the loan. But at nearly 8% interest, much of that payment goes toward interest instead of the principal.

“You’re trying to do two things at once and you’re not making great progress on either,” Kamel said.

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Drain Retirement Or Go All In?

Her idea was simple: cash out the IRA, pay off the loan and be done with it, but Kamel pushed back.

“You drain every penny of retirement to pay off these Parent PLUS loans. Now you’re left with nothing,” he said. “Now we’re down to Social Security and you working until you can’t work anymore.”

While $37,000 isn't enough to fully fund retirement, draining it would leave her with zero cushion.

Instead, Kamel suggested a temporary shift. Pause retirement contributions for about two years and aggressively attack the debt.

“We’re going to pause it all and we’re going to start throwing, you know, three grand a month toward the loan,” he said. “The more we throw at the principal, the faster this thing’s gone.”

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With her income and Social Security combined, that approach could eliminate the loan in roughly 24 months. After that, she could restart retirement investing without the 7.9% interest dragging her down.