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Stop Losing Social Security Benefits to Student Debt

Older Man with Head in Hand








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.

Some borrowers who have a total permanent disability may be eligible for a TPD discharge but have to comply with annual documentation though the annual requirements which are neither clear nor prominently stated. If the annual paperwork to verify income is not submitted the result can be the student loans returning like the ghost of Christmas past and the garnishment resuming.

The amount of student debt held by people age 65 and older has ballooned from $2 billion in 2005 to $22 billion by 2015. This is not a problem that will end soon.

If you or one of your friends or relatives is having their Social Security benefits garnished, you should know that not all hope is lost. If they are not disabled, they may qualify for an Income-Driven Repayment plan. The payment is based on Adjusted Gross Income so much of their Social Security benefits may not be counted at all.

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Posted December 22, 2016