Wednesday, December 21,
2016
Older
Americans Pushed Into Poverty as Feds Garnish Social Security for Student Debt
'Hard-earned Social Security checks should not be siphoned off
to pay interest and fees on student loan debt,' says Elizabeth Warren
"We could have hundreds of
thousands of American seniors living in poverty due to garnished Social
Security benefits if this trend continues," said Sen. Claire McCaskill of
Montana. (Photo: Kate Gardiner/flickr/cc)
The
federal government is garnishing Social Security checks to recoup unpaid
student debt, leaving thousands of retired or disabled Americans below the
poverty line and setting the stage for an even bigger problem, according to a
new report.
The data from
the Government Accountability Office (GAO), compiled at the behest of Sens.
Claire McCaskill (D-Mo.) and Elizabeth Warren (D-Mass.), showed that people
over the age of 50 are the fastest-growing group with student debt, outpacing
younger generations—and compared to younger borrowers, older Americans have
"considerably higher rates of default on federal student loans." This
leaves them open to having up to 15 percent of their benefit payment withheld,
in what's called an "offset."
In 2015,
the GAO reported (pdf), the Department of
Education collected about $171 million in defaulted student loan debt through
Social Security offsets from 114,000 people, the majority of that from
borrowers aged 50 or older and receiving disability benefits. About 38,000 were
above age 64, and more than three-quarters of older borrowers took out the
loans to cover their own education, rather than to pay for their children's
schooling. The typical monthly offset was slightly more than $140. And more
than 70 percent of the money collected through offsets went toward interest and
fees, as opposed to the loan balance.
"This
report demonstrates just how draconian these Social Security offsets are and
how there seems to be a failure at all sorts of levels of this policy,"
Persis Yu, the director of the Student Loan Borrower Assistance Project at the
Boston-based National Consumer Law Center, told MarketWatch.
Meanwhile,
the report states: "Older borrowers who remain in offset may increasingly
experience financial hardship. Such is the case for a growing number of older
borrowers whose Social Security benefits have fallen below the poverty
guideline because the offset threshold is not adjusted for increases in costs
of living."
Indeed,
the program—which itself may be under threat from a Trump administration—already hands out insufficient benefits, with the GAO noting
that "a growing number of these older borrowers already received Social
Security benefits below the poverty guideline before offsets further reduced
their income."
As shown
in the chart below, this impacts tens of thousands of borrowers:
In its
report on the "disturbing" trend, the Washington Post noted:
Some
people have been granted financial hardship exemptions, while others have
successfully applied for permanent disability discharge of their loans through
the Education Department. But researchers at the GAO are critical of
the agency's byzantine application process that puts borrowers at risk of
falling back into garnishment. If people do not submit annual documentation to
verify their income, their loans can be reinstated and the cuts can resume.
In turn,
Warren decried the tactics described in the report as "predatory and
counterproductive."
"The
hard-earned Social Security checks that are the sole source of income for
millions of seniors should not be siphoned off to pay interest and fees on
student loan debt," she said in a statement. "It's no wonder many
Americans don't think Washington works for them: our government is shoving tens
of thousands of seniors and people with disabilities into poverty through
garnishment every year—and charging them $15 every month for the privilege—just
so that the Department of Education can collect a little bit more interest and
keep boosting the government's student loan profits."
What's
more, with Americans 65 and older seeing their total student loan debt grow by
385 percent since 2005, McCaskill warned that these numbers are merely
"the tip of the iceberg of what may be to come."
"We
could have hundreds of thousands of American seniors living in poverty due to
garnished Social Security benefits if this trend continues," she said,
"and we shouldn't allow that to happen."
Social
Security Works and Student Debt Crisis, two non-profits working on different
aspects of the burgeoning crisis laid out in the GAO's report, last year pledged to "always fight in
solidarity with each other."
On
Wednesday, Student Debt Crisis tweeted: Alarming @USGAO report: Disabled/elderly
student loan borrowers having social security garnished. We join @SSWorks to demand this stops!
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Donations can be sent
to the Baltimore Nonviolence Center, 325 E. 25th St., Baltimore, MD
21218. Ph: 410-323-1607; Email: mobuszewski [at] verizon.net. Go to http://baltimorenonviolencecenter.blogspot.com/
"The master class
has always declared the wars; the subject class has always fought the battles.
The master class has had all to gain and nothing to lose, while the subject
class has had nothing to gain and everything to lose--especially their
lives." Eugene Victor Debs
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