The GAO recommends indexing the $9,000 to increases in inflation.Ĭlarify rules. The government can't take the first $750 a month of a person's Social Security, but that amount leaves seniors with as little as $9,000 a year in benefits, an amount that has never been adjusted for inflation. The National Consumer Law Center's Student Loan Borrower Assistance Project and Justice in Aging provide advice and resources for people struggling with payments.Ĭonsumer advocates have long called for legislative changes, and the GAO in its report recommended some of the same solutions. These options don't apply to private loans, though some private lenders may work with you to adjust payments. This also doesn't erase your debt but depending on your income, your monthly payment under a loan rehabilitation agreement could be as low as $5. People in default can "rehabilitate" loans by working out a payment plan with the Department of Education. You then have the option of doing an income-based repayment plan, which can make the payments more manageable and could reduce them to less than what is taken from Social Security. You can call the Department of Education to request a suspension, then follow up with the documentation needed for them to review.Ĭonsolidate your loan. You could get out of default by converting your defaulted federal loan into a federal consolidation loan. It is up to the Department of Education whether they will grant it. You may request a reduction or suspension of the garnishment of your Social Security because of financial hardship. One caveat: The amount forgiven is considered income and you will owe taxes.Īpply for financial hardship. More than half of borrowers having their Social Security seized are on disability payments. Though the process can be onerous-such as the need to document it annually-more than one-third of people in default were able to pay off or cancel their debt with this option. Seniors who are disabled with a condition not expected to improve may qualify to have their loans canceled with a total and permanent disability discharge. Here are some options.Īpply for a disability waiver. There are ways to get relief from the seizure, but few seniors know their options, or they find the process difficult to see through. It's a dire circumstance to be in but it's not without remedy, under both the current system and longer term with legislative changes. What's really troubling is that there will be more and more people in this situation."Īmericans owe some $1.3 trillion in student loans, and an increasing number are defaulting. "The rising cost of higher education means that the debt itself is much larger and it's much more difficult to pay it off over time. "This is something that was not common till recently," says Kate Lang, a senior staff attorney at Justice in Aging, a nonprofit that provides legal protections for low-income seniors. About 7 million Americans over age 50 have student loan debt. The number is expected to continue growing as more baby boomers enter retirement with student loan debt. The amount being seized is relatively small-less than 10 percent of the $4.5 billion collected annually on defaulted loans is taken from Social Security income-but the number of people it affects is up sharply.Ībout 114,000 Americans have had Social Security income seized, up 440 percent from 2002 and up 540 percent for people over 65. Though private creditors typically can't seize Social Security, a law passed in 1996 granted government agencies the right to collect on debts by "offsetting" Social Security. The loans were taken out-often decades ago-by people seeking midcareer training to land a better job or to help pay for their children's education. But there are, in fact, some things you can do to ease the burden, including getting better repayment terms, having the debt reduced, or even getting it forgiven (find out how below). This growing practice has left many baby boomers and other seniors feeling they have few options. That move is pushing many seniors into poverty, according to a report published Tuesday by the Government Accountability Office. The government, which guarantees student loans, is taking hundreds of dollars each month from people 50 and older who are getting Social Security benefits for disability or retirement. It's not just millennials who are burdened with student loans.Ī growing number of older Americans are having their Social Security income garnished by the government to pay off student debt that is often decades old and in default.
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