Person giving money to Uncle Sam


Social Security benefits for tens of thousands of older and disabled Americans are being cut to below the poverty line to recover student loan debt.  A group of senators including Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) are trying to change that. They have introduced a bill that would prohibit the government from garnishing Social Security disability and retirement payments to pay off these old debts. Senator Warren, in a news release on her website, said, "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.”

This is the second time the Senate has tried to change the way the government collects on student loans. A similar bill was introduced in 2015 but failed to pass. In the current strongly partisan environment in Washington, no one believes passage of this bill will be any easier this time around.

“It’s a challenge,” Senator Sherrod Brown (D-OH), a co-sponsor of the new bill, told MarketWatch (a financial newsletter published by Dow Jones & Company). “Senators and House members are hearing about this problem more and more. We’re hearing all kinds of people calling us surprised that [the government] can do this.”

The number of those with unpaid student loans who are facing garnishment (which the government calls an offset) has jumped dramatically in recent years. According to a December report from the Government Accountability Office between 2002 and 2015 those in this predicament has increased nearly 400%.

MarketWatch says there are “multiple factors [which] explain that spike. For one, over the past several years we’ve witnessed rapid growth in the number of students going to college or returning to school during their career. But perhaps more important, rising college costs over the past few decades means that it’s more likely that an older adult would have taken on a student debt either to pay for their own schooling or that of a child. The challenges these older or disabled borrowers face paying back their loans is increasingly pushing them toward the financial brink. The 1996 law that allows the feds to garnish Social Security benefits over student loans requires that they leave the borrower with a minimum of $750 in benefits. But that floor hasn’t been adjusted since the 1990s to account for the rising cost of living.” Senator Brown quoted on his official website says, “The number of Americans who have had their benefits garnished by the federal government has dramatically increased in recent years – from 36,000 in 2002 to a staggering 173,000 in 2015...[which] includes certain people under 65 who receive Social Security Disability Insurance.”

As reported by Marketwatch, “Brown said he’d like to see lawmakers do more on the front end so that fewer Americans end up in default on their student loans while collecting on Social Security. He suggests reforms, such as allowing borrowers to refinance their federal student loans to lower interest rates, increasing the value of the Pell grant — the money the government provides to low-income students to pay for college — and a larger investment in the nation’s community colleges to make them more affordable for students. Until then, though, he’s hoping to at least make it easier for student loan borrowers collecting on Social Security to cope with their debts. ‘It’s just government punishing them and it shouldn’t work that way.’”

“Americans work hard to earn their Social Security and we cannot allow it to be stolen away by student debt,” Brown said in a news release. “Instead of going after seniors and the disabled, the government should be working to address the skyrocketing cost of student debt.”

Timothy J. Cuddigan
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Omaha Social Security and Veterans Disability Lawyer With Over 40 Years Experience
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