Legal landscape note: This article was originally published in 2017 and describes the law as it stood at that time. New Jersey law changes frequently.
You count on your Social Security check to cover the month. Then part of it disappears, garnished to pay a federal student loan from decades ago -- your own, or one you cosigned for a child or grandchild. It is legal, and according to a report from the Government Accountability Office, the federal government is increasingly cutting payments received by Social Security benefit recipients to help cover student loan debt.
“Most of the money collected, 70 percent, went to pay interests and fees, not to reduce the outstanding balance. Among those over 65, the number receiving Social Security Benefits below the poverty grew to 67,300 up from 8,300 in 2004, the GAO said.” By adding interest and fees, and raising their loan balances every month, the situation will only get worse. Many of these benefit recipients rely solely on their Social Security payments, as their main source of income and according to the report, “hundreds of thousands of American seniors are living in poverty due to garnishes on their social security benefits” Clearly seniors and those who receive disability are not immune to the student loan crisis, and clearly their main source of income, social security, barely pays their cost of living. If this is the case, should the government be allowed to strip these people of all they have, and force them into poverty?
The GAO recommended that the government adjust its Social Security garnishments to reflect increases in the cost of living and make it easier for those on disability to discharge their debt. Without a policy fix, the problem is likely to grow as more borrowers reach retirement age still carrying student debt.