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Retirement Planning > Social Security

Senators seek to halt Social Security seizures for student debt

By Janet Lorin

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(Bloomberg)– Two U.S. senators are attacking the government’s practice of garnishing Social Security to recoup unpaid student debt from borrowers who are now elderly.

Senators Elizabeth Warren and Claire McCaskill, both Democrats, asked the Government Accountability Office to study the impact of garnishment on borrowers in their 60s and older on concerns about retirement security, they said in a letter today.

Treasury Department policies let the government take Social Security payments for defaulted student loans.

“Garnishing Social Security benefits defeats the entire point of the program — that’s why we don’t allow banks or credit card companies to do it,” McCaskill, the top-ranking Democrat on the Senate Special Committee on Aging, said in a statement.

Repaying student loans isn’t just a problem for young people. Students and their parents have borrowed more than $1.2 trillion in education loans, with 5 percent held by borrowers 60 and older in 2014, according to data released last week by the Federal Reserve Bank of New York.

Outstanding federal student debt for those 65 and older grew to about $18.2 billion in 2013 from about $2.8 billion in 2005, according to a September 2014 GAO report.

 

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