When your Social Security check disappears because of an old student loan

[Yo_Mama_Been_Loggin]

Naomia Davis hasn’t been able to talk on the phone since 2004. The 80-year-old Brooklynite was diagnosed with Alzheimer’s more than 10 years ago and can no longer read.

Despite all of this, the government still expects her to pay back a federal student loan she took out in the 1980s to attend cosmetology school. And so every month, $140 of the $822 Davis gets in Social Security—her only income, except for Medicaid—is garnished by the government and put toward paying back her debt.

“How can you take money from someone who is not in her right mind?” asked Monica Arroyo-Horne, Davis’s 55-year-old daughter, who now legally controls her mother’s finances. “It’s horrible, I feel bad for her. I sit here and often wonder what if I wasn’t here in her life.”

After sending letters to government agencies and local council members in an effort to stop the government from garnishing her mother’s benefits, Arroyo-Horne turned to lawyers at the Brooklyn Office of the Aging, a division of New York City’s Legal Aid Society to try and get the Department of Education to forgive the loan. The application has been pending since late last year and they’re still waiting to hear back.

Davis’s story isn’t unique. In 2013, the government garnished about $150 million in Social Security benefits from Americans to pay back their student loans, according to a September analysis from the Government Accountability Office. Between 2002 and 2013, the number of senior citizens losing out on a portion of their Social Security to pay back education debt soared 500% from 6,000 to 36,000.

That number is only expected to grow as generations of Americans who were more likely to take on loans for their own schooling or to pay for their kids’ education retire. More than 3 million Americans ages 50 to 64 are in default on their student loans, putting them at risk of having their benefits garnished when they claim Social Security, if they don’t find a way to become current on their debt. When students take on loans through the federal government instead of through private lenders they have access to protections such as the ability to pay according to their income or defer payment on their loans if they become unemployed. But the federal government also has powers, not available to private lenders, to collect on those loans if borrowers default instead of finding a way to pay them back, such as garnishing portions of borrowers’ tax refunds and Social Security checks.

-more-

http://www.msn.com/en-us/money/retirement/when-your-social-security-check-disappears-because-of-an-old-student-loan/ar-AAc71U7

[randys1]

1. I know Bernie is good on this, how about O'Malley and Hillary? I assume all GOP pricks

are for continuing this insanity

[former9thward]

28. How about Obama?

He is the one doing this.

[Ghost in the Machine]

2. I didn't know that they could garnish Social Security Benefits... I do know that they can't touch

Disability Benefits, though. I wonder if this is a State by State thing, or if it comes from the Federal Level? I'll have to look into that.

Thanks for the post!

Peace,

Ghost

[NightWatcher]

3. Nope, they can garnish disability. They take 15% off the top

I was almost finished repaying when I went on disability. I'll be finished with it sometime next year, but they've been taking since I went on disability.

[meow2u3]

4. Not if you have the student loan forgiven

on the grounds of total and permanent disability.

[NightWatcher]

5. but a lot of people (me included) are up for review of disability every 3 years

and they wont forgive the debt because there's the possibility that you'll get off sometime.

I'm up for review next month. Either it will be quick and a technicality or I'll go to their doctor.

I'm not worried, I'm still sick (the diseases are not curable)

[Ghost in the Machine]

8. I just sent in my review papers last week. I got them the day after having an MRI on my back, and

4 days before seeing my Neurosurgeon for the results. One of the questions was "Have you spoken with your doctor about returning to work?" The answers were "A: No, I haven't spoken to my doctor. B: Yes, and my doctor said that I could NOT work. & C: Yes, and my doctor said that I CAN work."

I showed my doctor, and his exact words were "Oh HELL NO! You will never work again, you're legit, there's too much wrong with you." He is the one who wrote the letter that got my disability approved. He said that I was 100% total, permanently disabled in the letter. He said that he would stand behind that letter until the day I die.

When I first saw him in 2003, he checked my MRIs, came back into the room and said "HOW the hell did you walk in here??? From the extent of your injuries, you *should* be a quadriplegic in a wheelchair right now!" I see him every year for an annual MRI/check-up and every time he sees me, he gets a big smile on his face and says "I *still* can't believe that you're still walking!" I always tell him "well, it was your surgeries that helped and I owe my life to you." See, he told me before my first neck surgery that I was facing a higher percentage risk of coming out of it paralyzed from the neck down than not. I'll always remember the first thing I did when I came to was try to wiggle my fingers and toes. When I could, I let out a HUGE sigh of relief! I already had a pact with someone that if I *did* come out paralyzed from the neck down, they were either going to smother me with a pillow, or OD me with pain meds. I didn't want to be a burden on my parents or children, and figured I would have NO "quality of life". I'm glad that things worked out good for me... my condition is incurable too, and the latest MRI has shown that I have gotten worse...

Peace to you,

Ghost

[Ghost in the Machine]

7. That must be a State by State decision, then. Back in '06-'07 I owned a restaurant. Come to find out

after I closed down, my book keeper wasn't sending in the tax money she took out of employee checks, nor my share of it.

In 2009, I started getting letters from the IRS saying that I owed around $60,000 in back taxes. Hell, they had me down for periods that I wasn't even open! I had an IRS agent show up at my house one day and we went over all of the paperwork that I had, I showed where I filed MY taxes each year because I was running under a "Sole Proprietorship". After spending several hours going over everything, taking off for the periods that I wasn't open, etc., the Agent had me knocked down to owing right around $400 and said that he was going to file it as "Unenforceable" due to me now being on disability. I set it up to make payments anyways to get it paid off.

I'm trying to find the information to provide a link, but even the IRS Agent told me that NOBODY, not even the Government, can touch my disability benefits.

Peace,

Ghost

[Ghost in the Machine]

13. I found this: Tennessee Garnishment Exemptions and Non-Exemptions

Tennessee Garnishment Exemptions and Non-Exemptions

Social Security is established by federal law, and under federal law, it is mostly (though not completely) exempt from garnishment. Social Security income can be garnished for child support, alimony, and debts owed to the federal government (principally taxes), but nothing else. Tennessee goes further than federal law, however, and completely exempts social security from garnishment.

In addition, states may create additional exemptions to garnishment; that is, they may protect certain types of income from being garnished. Tennessee has gone ahead and exempted more types of income than most other states. Many kinds of non-wage, non-salary income are protected from garnishment, including:

Pensions: Tennessee provides broad protection for retirement benefits, whether for public worker (both state and local, and including teachers) or private employee.
Public assistance or benefits: all the principal kinds are protected, including workers’ compensation; unemployment compensation; aid to the blind, elderly, and disabled; aid to families with dependent children; general assistance; and veteran’s benefits.
Damages and awards: Tennessee protects varying amounts of personal injury awards from lawsuits, wrongful death awards (if the recipient was a dependent of the deceased), and crime victim’s compensation, up to a total of $15,000.
Insurance and annuities: Fraternal society benefits; accident, health, and disability benefits; and annuity benefits payable to dependents.
Alimony and child support: amounts which come due more than 30 days after the recipient has asserted a claim in a judicial proceeding for the exemption.

There is an excellent chance that non-wage, non-salary income is protected in Tennessee, particularly insurance, retirement, or public benefits

http://www.debtsettlementlawyers.com/resources/debt-settlement/debt-collection/tennessee-wage-garnishment.htm

{emphasis mine}

Peace,

Ghost

[Yo_Mama]

14. TN law has no bearing on what the federal government does.

The rules are that most student loans will be garnished from SS.

In BK or through I believe a special appeals process, you can get student loans dismissed for total permanent disability. Otherwise, there's not much else you can do.

[Ghost in the Machine]

16. Did you see my reply #7??

I was told by an IRS Agent that he was going to put my case down as "Unenforceable" because they COULD NOT TOUCH my disability checks. I made arrangements to make small monthly payments anyways, as it was just a little over $400, and I have ALWAYS paid my taxes, as should everyone else.

Peace,

Ghost

[Yo_Mama]

20. That's not student loans, but tax liabilities. Different laws, different rules.

Here is a Findlaw article covering the issue pretty simply:
http://bankruptcy.findlaw.com/debt-relief/consequences-of-a-student-loan-default.html

The Debt Collections Improvement Act allows the government to take some social security benefits from a student loan borrower in default. Supplemental Security Income is off limits, but Social Security retirement benefits and Social Security disability benefits can be set aside to pay loan debt. Only $9,000 per year, or $750 per month, can be used, however. If the borrower receives less than this amount, taking Social Security benefits is prohibited. Additionally, the amount cannot exceed 15 percent of the borrower's federal benefit.

If you are working, they usually will take tax refunds. They also can go to the state to take your professional license, or garnish your wages.

Usually to get a student loan discharged, you have to go through some process and your claims will be scrutinized. To succeed, your income must be so low as to not afford you or your dependents a minimal standard of living, the situation must be persistent and beyond your control, and in BK, it usually also takes a showing that you tried to repay when you did have income.

So a person may be on total and permanent disability but have an income high enough that some repayment would be required.

The "minimal standard of living" is up to the court, and there are federal programs that you can apply to outside of BK proceedings.

If you are totally and permanently disabled and receiving DI above $750 a month, they will take part of your benefit.

You can apply for a discharge of Direct, Perkins or FFEL loans directly on the grounds of permanent disability:
http://www.disabilitydischarge.com/faqs/

[Spirochete]

17. They casn garnish disability

They've been taking out of mine since 2008. I just had it forgiven due to total and permanent disability, but they were taking it out for years.

[Ghost in the Machine]

19. Not in Tennessee....

Tennessee Garnishment Exemptions and Non-Exemptions

Social Security is established by federal law, and under federal law, it is mostly (though not completely) exempt from garnishment. Social Security income can be garnished for child support, alimony, and debts owed to the federal government (principally taxes), but nothing else. Tennessee goes further than federal law, however, and completely exempts social security from garnishment.

In addition, states may create additional exemptions to garnishment; that is, they may protect certain types of income from being garnished. Tennessee has gone ahead and exempted more types of income than most other states. Many kinds of non-wage, non-salary income are protected from garnishment, including:

Pensions: Tennessee provides broad protection for retirement benefits, whether for public worker (both state and local, and including teachers) or private employee.
Public assistance or benefits: all the principal kinds are protected, including workers’ compensation; unemployment compensation; aid to the blind, elderly, and disabled; aid to families with dependent children; general assistance; and veteran’s benefits.
Damages and awards: Tennessee protects varying amounts of personal injury awards from lawsuits, wrongful death awards (if the recipient was a dependent of the deceased), and crime victim’s compensation, up to a total of $15,000.
Insurance and annuities: Fraternal society benefits; accident, health, and disability benefits; and annuity benefits payable to dependents.
Alimony and child support: amounts which come due more than 30 days after the recipient has asserted a claim in a judicial proceeding for the exemption.

There is an excellent chance that non-wage, non-salary income is protected in Tennessee, particularly insurance, retirement, or public benefits

http://www.debtsettlementlawyers.com/resources/debt-settlement/debt-collection/tennessee-wage-garnishment.htm

{emphasis mine}

That, being coupled with being told by an IRS Agent that they COULD NOT TOUCH my disability income, is what I know to be true. I had run into some problems with the IRS several years ago due to my book-keeper not sending in payments from my business. They had already wiped out one bank account of a little over $400, which belonged to my then minor daughter, just because my name was on the account too. That was before I had been approved for disability.

About a year after I was approved, I had an IRS Agent show up at my house. We spent a few hours going over everything.... they even had me down as owing money for periods long after I had closed my business! By the time we were done, he had me down as only owing a little over $400. He said that he was going to file my case as "Unenforceable" because they "COULD NOT TOUCH my disability benefits. I made arrangements to make small monthly payments to pay it off anyways, because I have ALWAYS paid my taxes and believe everyone should when required to. I've worked "under the table" before, but ended up filing a Form 1099 come tax time.

Peace,

Ghost

[Spirochete]

22. Tennessee must be a better system

Here in Washington, they've been taking all but $750 out of my SS every month.

[Ghost in the Machine]

24. Damn, that really sucks! Sorry you are having to deal with that...

... I know that *I* couldn't live on that! I hope things get better for you soon...

Edited to add: I just saw where you got it stopped due being permanently disabled, so I am happy for you in that respect. It's too bad you can't make them pay YOU back all of the money that they took.

Peace,

Ghost

[Spirochete]

25. Thanks. It should ease things up somewhat now

only thing is - the letter warned me that the forgiven debt would be counted as taxable income. So next April, I'll owe taxes on my SS plus some 20,000 plus dollars. If I can take care of that, I'm good to go.

[aspirant]

6. SS; $750/month is guaranteed by law for retired Student Loan Debtors,

above that they can garnish

[Liberal_in_LA]

9. kick

[Dont call me Shirley]

10. That is horrific! Let's see if one of those legislators who voted for this garbage law can live on

$682 or even $822 a month.

[Prism]

11. It's actually tricky

I've a friend who is the head of financial aid for a major university, so I can speak a little on this.

Basically, there's a cap/minimum. The government can only take so much off Social Security payments. So what you end up with are students (generally older) who take out exorbitant loans that they never intend to pay back. They know they will never be much on the hook, so they go nuts.

He tells me stories about "The Grandmas" who take tens of thousands in classes at his university, who take loans they know they'll be approved for, and know they will never have to bother with in the long run.

There's a lot going on here. The cost of education, student loans, etc.

But, it's a bit hmm all around. If Social Security is your sole income, you can actually get away with all kinds of shit at universities that other students would never dream of.

If college education were free, or the current system were reformed so it was affordable, this wouldn't be an issue.

But under the current system, there's funny business. Play stupid games, win stupid prizes.

[Igel]

12. She probably didn't pay on it in the '80s and '90s.

Probably couldn't afford to.

$140 a month ... Since when? Since she started getting Social Security? That's hardly reasonable. That would be over $25k. Hard to imagine a cosmetology program loan, even after 30 years, costing that much.

And what was the interest rates on the loans? Back in the '80s, with high inflation, some loans were at 8% or more and were fixed. That's the kind of thing you refinance when rates fall otherwise they grow until they're unmanageable.

[Yo_Mama]

15. 5K at 8% for 30 years without payments would total over $54,000 w/ monthly int of $360

As the interest accrues unpaid, you are paying interest on interest.

It's next to impossible to refi a student loan if you have not been paying on it, or even if it is current. Almost always, the refied loan can then be dismissed in BK. So everyone who wanted to default on their student loans tried to refi them, and now, forget about it.

[Art_from_Ark]

18. Student loans are becoming just another racket

The story at the link also talks about another loan for $35-45,000 that was defaulted on 10 years ago, and the debt is now $185,000 There is something terribly wrong with this equation.

[eppur_se_muova]

21. What's this "becoming"?

Student loans were designed from the beginning to provide guaranteed income to lenders, with subsidies and enforcement costs borne by taxpayers. That's what happens when lobbyists write legislation.

[Art_from_Ark]

27. When I got my NDSL (National Direct Student Loan),

the terms and interest rates were much better. The interest rate at the time was lower than the interest rate of savings accounts. No interest accrued while I was in school, and I had 9 months interest-free after graduation to either start repaying the loan, or continue with my education. In the 7 years from the time I got my loan until I finally left school, there was no interest, just the principal. As soon as I got my first real job, I arranged to pay back every penny during the grace period, rather than follow their suggested payment plan of $30/month for 10 years.

[mackdaddy]

23. One of my students came up with a potential solution for this.

I taught at a community technical college for a few years, and would discuss with my students how serious these "easy" student loans would really be in their life, including not being able to discharge them in a bankruptcy, and they would even take it out of their Social security when they retire as in the OP above.

One of my mostly adult students (who happened to be an ex-con) said well in that case after he graduated, he would just accept all of those dozens of credit card offers he got every week, and use those to pay off his student loan. Then after a while when he could not make the minimums he would then go bankrupt.

I had to agree that might work.

[B Calm]

26. Bingo! He must be listening to Donald Trump. .