A portion of their meager Social Security benefits are being
taken by the government to pay for old student loans they had mostly forgotten
about. It's a growing national trend. Last year, 156,000 Americans had their
Social Security checks garnished because of student loans they had defaulted
on. It's tripled in number from 47,500 in 2006, before the Great Recession.
That's according to analysis done by the U.S. Treasury for CNNMoney.
A leading nonprofit group that works with students on
repaying loans, American Student Assistance, has worked this past year with
over 1,000 Americans who have had their social security payments garnished to
repay outstanding student loans. That's a sharp increase from 200 people in the
For retirees, any cuts to their Social Security benefits
really hurts. What's worse is that even if the unpaid student loan was small,
the amount they owe now is usually a lot larger because of compounding interest
Older Americans are
Retired Americans can start collecting Social Security
benefits at 62. However, the folks that Cohen has worked with are in their 70's
It's a substantial
The amount taken from these checks isn't small. The average
Social Security monthly check is $1200, the typical amount taken is $180.
possible for most
Very few student loans can be refinanced and many people
have outstanding loans with interest rates locked at over 7%, even though rates
have fallen in recent years to below 3%.
Repayment terms on student loans are extremely rigid. They
are rarely forgiven even in bankruptcy and people can have their wages
garnished if they default.
The issue caught the attention of Senator Elizabeth
Warren, who introduced a bill earlier this year to allow millions of
people like Anderson to refinance their student loans. However, the bill was
blocked in June.
Disabled not spared
Social workers are also seeing an increase in the number of
people with mental and health issues having their Social Security disability
According to the government data, the total amount garnished
from social security checks last year came to $150 million.
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