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Senior Citizens are the Fastest Growing Segment of Student Debtors – 5 Things You Need to Know

Senior Citizens
Senior citizens, not college seniors are the fastest growing segment of student loan borrowers. More than a quarter of borrowers over 60 are still paying loans from their own education.

Almost seventy percent are dealing with loans they took out or co-signed for their children or grandchildren. The remaining five percent are sandwiched between their own or a spouse’s loans and a child’s loans.

On the Tuesday before Christmas 2016, the Government Accounting Office reported that older Americans who rely on Social Security benefits to live are being pushed below federal poverty guidelines due to garnishment of their benefits.

“Even Scrooge would hesitate to say it’s a good idea for the government to be putting Social Security recipients into poverty trying to recover payments on student loans.” said Sen. Elizabeth Warren. (D-Mass.)

The GAO report found that older borrowers (age 50 and older) who default on federal student loans are having to repay that debt with a portion of their Social Security benefits and often have held their loans for decades.

GAO Chart

 

 

 

 

 

In 2015 the Department of Education collected $171 million through Social Security offsets. It was determined that nearly half of borrowers age 50 and older had held their student loans for 20 years or more.

“Our government is shoving tens of thousands of seniors and people with disabilities into poverty through garnishment every year — and charging them $15 every month for the privilege — just so that the Department of Education can collect a little bit more interest and keep boosting the government’s student loan profits,” Warren said.

Private lenders are not allowed to garnish the Social Security benefits seniors collect but not to hear them tell it.  The Consumer Financial Protection Bureau a federal consumer agency has received complaints about debt collectors threatening to do just that.

The amount of student debt held by people age 65 and older was estimated at $66.7 billion in 2015. This is not a problem that will end soon.  39% of student loan borrowers over 60 had skipped medicines, dental care, and doctor visits according to a 2014 study by Mathieu Despard assistant professor at the University of Michigan.

Some of the delinquencies, defaults, Social Security garnishments and tax refund offsets could have been avoided if the firms responsible collecting student loan payments were doing a better job.

Navient corp. formerly part of Sallie Mae has been sued by the CFPB. The CFPB is alleging that Navient has deceived and cheated Americans struggling to pay back their private and federal student loans.

The CFPB is alleging that student borrowers were provided with inaccurate information, had payments processed incorrectly and were directed to higher-cost repayment options.  It is alleged that Navient steered borrowers to “forbearance” rather than help them with the income-driven repayment options.  Under government rules, debtors are supposed to be able to lower their payments when they have a change in income.

Five things you should know

1. If you or one of your friends or relatives are having their Social Security benefits garnished, you should know that not all hope is lost. It can be  stopped.

2. Some borrowers who have a total permanent disability may be eligible for a TPD discharge.

3. If you are not disabled and have retired and experience a drop in your income, you may qualify for an Income-Driven Repayment plan.

4. If you are already on an income-driven plan and experience a loss of income you can apply now for a change in your payments. You do not have wait for your annual certification.

5. You can find out more on the available programs Federal Student Aid an Office of the U.S. Department of Education.


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Posted August 30, 2017