Elderly Facing Social Security Garnishment to Pay Off Student Loans



August 24, 2014;KTVZ-TV

Nonprofits may be addressing a whole new set of problems for elderly people on fixed incomes. According to the Federal Reserve Bank of New York, more than 2 million Americans are carrying unpaid student loan debt at age 60 and older. This is up from 700,000 in 2005.

Bloomberg reports that there unpaid loans total $43 billion in and that the average debt per older borrower has, since 2005, risen by more than 60 percent to around $20,000. CNN reports that, according to an analysis done by the U.S. Treasury for CNNMoney, last year 56,000 Americans had their Social Security checks garnished for payment of student loans—in 2006, it was 47,500.

One nonprofit, American Student Assistance, has worked with more than 1,000 people over the past year who have had their Social Security payments garnished to pay loans, as compared to 200 the previous year. Many are in their seventies and eighties. The average Social Security monthly check is $1200, and the average amount taken monthly is $180. Of course, it’s often the case that between penalties and interest, the debt has ballooned over time.

According to this article, besides the elderly, social workers are also seeing more people with mental and physical health issues having their Social Security disability checks garnished. Deanne Loonin, a director at the National Consumer Law Center, said, “I had a Korean War veteran in his 80s who had taken out a student loan for his son and then began having health problems. The government took money from his Social Security disability checks—money that he needed to buy medications.”

Garnishments from Social Security checks last year totaled $150 million.—Ruth McCambridge

  • Larry

    While I feel for those having money taken from their SS checks, it is a debt they owe. They applied and were granted a loan, not a gift. Not all SS recipients are living in poverty and can well afford to pay their debts. People in our society need to take responsibility for the choices they make in life.

  • Miami-Sid

    Well it called a loan for a reason. It is difficult to feel for those who borrow but do not pay off their loans. And as noted by another not everyone who gets social security is destitute.

  • Sue

    If they think it’s bad now wait until my generation starts drawing on SSI. It will be another major economic crisis.

  • Sally K

    I don’t think Miami Sid and Larry understand that it’s not the original debt that they can’t pay off. It’s the capitalized interest that caused the loans to balloon. People can’t pay 4 or 5 times what they borrowed. Since there are no statutes of limitations the loans can and do grow for decades. If people in our society need to take responsibility for the choices they make in life, what about the responsibility of the lenders who give out $100,000 in loans with no credit checks and dim job prospects. Or the schools that take money and really don’t teach any useful job skills.These title IV loans are not subject to truth in lending laws either so a lot of people really don’t know what they are signing.

    Once the government guarantees a loan the lenders and schools don’t care how much the loan is since they know they will get their money no matter what. It’s become a revenue stream for collection agencies with some collection agents earning six figure salaries. Income Based Repayment is available but most of the servicers of the loans don’t inform borrowers that this program even exists. The government hasn’t done much to help out with that either. People have to apply each year again for IBR, sending in papers and a lot of documents. Not that easy when you are on medication, not feeling well and in your 80’s. It amazes me that people have that you borrowed you should pay it back attitude when we as taxpayers bailed out the banks who didn’t share that same responsibility.

    They can’t take the first $750 dollars of your social security check. If you only get $1200 which is average and we are talking about average here then the government can offset up to 15% of that check.That’s about $180 a month. Try living on a little over a thousand dollars a month these days. That leaves a person with a little over poverty level to exist on. Exist not live.

    If someone is existing only on SS you can bet they will need other social services provided by the government or state they live in , like food stamps. In that case the government makes out really well. They rake in interest that’s capitalized for decades, the collection agencies get their cut and the taxpayer ends up supporting these indigent elderly people because the government wants MORE than the original loan. The GOVERNMENT capitalizes the interest and it’s a feeding frenzy for companies like Sallie Mae , ECMC and others. The CEO’s of these companies have their own private planes , McMansions and you my dear taxpayers are paying for their lifestyle.