Every month, hundreds of thousands of people eagerly await the arrival of their Social Security check, as it will help ensure that they have enough money to help cover the basic necessities of life such as shelter, food, clothing and medication. However, recently released reports show that an increasing number of recipients are now seeing their benefits garnished to a considerable degree.
As it turns out, the culprit for these garnished Social Security payments is outstanding student loan debt that taken out many years ago and all but forgotten.
According to data from the U.S. Treasury, the number of Americans who had their Social Security benefits garnished as a means of repaying outstanding student loans reached 47,500 back in 2006. While this seems like a significant number, consider that this number spiked to 156,000 in 2013 with $150 million being garnished from Americans in their 60s, 70s and 80s.
As if the notion of garnishing the Social Security income of elderly Americans isn’t discouraging enough, reports show that the same thing is happening to disabled Americans, many of whom can ill afford benefit reductions of close to $200.
What makes all of this so problematic, say experts, is that for many of these people, the student loan taken out several decades ago was relatively small, but has since ballooned to a substantial sum thanks to high interest rates. Compounding the problem is the fact that student loans are typically not able to be refinanced, subject to stringent repayment terms, and not easily forgiven.
The good news is that at least some lawmakers are aware of the problem. For instance, Sen. Elizabeth Warren (D-MA) proposed legislation that would have enabled millions of people, including Social Security recipients, to refinance their student loans. However, the measure was blocked in Congress earlier this summer.
This is understandably a very difficult and very stressful state of affairs for Social Security recipients. Here’s hoping Congress finally takes the time to examine this situation at some point and introduce the necessary measures.
Source: CNN Money, “Retirees’ Social Security checks garnished for student loans,” Patrick Sheridan, Aug. 24, 2014