Haunted by Student Debt to the Grave

[LongTomH]

It will not be news to 41 million Americans that this nation is in the middle of a student debt crisis. That’s the number of people burdened by student loan payments. But many people, including many student debt holders, may be surprised to learn that people can be pursued for student debt even into their elder years.

In fact, the government is withholding Social Security payments for some retirees because their student loans have not been fully repaid. This is a growing problem that Sens. Elizabeth Warren (D-Mass.) and Claire McCaskill (D-Mo.) have asked the government to study in greater depth.

“Garnishing Social Security benefits defeats the entire point of the program — that’s why we don’t allow banks or credit card companies to do it,” said Sen. McCaskill. “Social Security is the sole means of retirement income for tens of millions of Americans, and allowing those benefits to be garnished to collect student loan debt cuts a dangerous hole in our safety net.”

That is one problem with this practice. But, as we will see, there are others.

Many people will be surprised to learn that any seniors are still paying off their student debt. They are: 706,000 households headed by someone 65 or older are still paying off their student debts, according to a report by the GAO. Collectively these households owed $18.2 billion in 2013. That’s six-and-a-half times as much as they owed in 2005, when these senior households’ total debt obligation was “only” $2.8 billion.

Of those households, 191,000 – more than one in four – are in default. The government can take up to 15 percent of a Social Security check to pay back a student loan, as long as the monthly check amount does not drop below $750 a month.

Social Security payments could not be seized for any reason until – for the first time ever — Congress created an exception for student debt in 1996. Before then, Social Security was protected from garnishments of any kind. That was deliberate. The original Social Security Act of 1935 stated that benefits were not “subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.”

Read more here: http://ourfuture.org/20150728/haunted-by-student-debt-to-the-grave?utm_source=progressive_breakfast&utm_medium=email&utm_campaign=pbreak