An Epidemic of Seniors Using Social Security to Pay Student Loan Debt
According to the Government Accountability Office (GAO), tens of thousands of retirees have their Social Security benefits garnished every year to recover defaulted federal student loans.
Filing for Social Security with Outstanding Federal Student Loans, Not So Fast
Seniors need to e careful about taking out student loans for kids or themselves. If you think your Social Security Benefits are protected, think again. This alarming trend shows the need for individuals to carefully consider the long-term impact of taking on student loan debt and prioritize avoiding it whenever possible.
Remember colleges get there tuition money up-front and have no responsibility for low earning majors that students graduate with.
The Reality of Social Security Garnishments
According to the Government Accountability Office (GAO), tens of thousands of retirees have their Social Security benefits garnished every year to recover defaulted federal student loans. See the study here (https://www.gao.gov/products/gao-14-866t). This practice is legal under the Treasury Offset Program (TOP), which allows the federal government to reduce Social Security payments to collect on debts, including unpaid student loans. Up to 15% of monthly benefits can be garnished, although a minimum of $750 per month is protected.
I mean look, you can certainly live off of $750 a month in retirement, right?
For retirees living on fixed incomes, this garnishment can be devastating. Many already struggle to cover basic expenses and having their Social Security checks reduced pushes some seniors into the poor house or dog food.
The Problem is Getting Worse
The issue of Social Security offsets for student loan debt has grown significantly over the years. A 2016 GAO report (https://www.gao.gov/products/gao-14-866t) found that between 2002 and 2015, the number of Americans aged 50 and older with student loan debt quadrupled. Many of these individuals had borrowed loans not for their own education, but to help their children or grandchildren.
Again, we expect our kids to be able to pay us back but if they take a loan for a theater degree, you'll be waiting a long time.
Parents Taking Plus Loans Count Here As Well.
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