Student Loan Debt Meets Social Security
We bet you never thought you would see the words “student loans’ and Social Security in the same sentence, but recent college grads aren’t the only ones worrying about their student loans. Many people close to Social Security age are also in that boat.
Worse, if the loans are not paid before they reach retirement age, they could, and probably will have their Social Security benefits garnisheed to pay them down.
Under the Debt Collection Improvement Act of 1996 Social Security beneficiaries have a $750 cushion, but up to 15% of benefits above that line can be seized to pay down debts, including student loans.
A recent government report shows that almost a third of all student loan debt is held by people over the age of 40. Just over four percent of the total debt — roughly $42 billion — is held by people over the age of 60.
Not all of them borrowed for themselves. Many parents and grandparents cosigned loans for younger family members who defaulted and left mom and pop, or grandma and grandpa stuck with the bill.
Even so, many loans were taken directly by older students going back to school to get training for career changes made necessary by the shaky economy and job market.
There’s more shocking information about Social Security and student loans at: