Millions of older adults with student debt are at risk of losing some Social Security benefits, lawmakers warn

Millions
of
older
adults
who
are
behind
on
their
student
loans
could
soon
receive
a
smaller

Social
Security
benefit.

That
was
the
warning
from
Democratic
lawmakers,
including
Sen.
Elizabeth
Warren,
D-Mass.,
and
Sen.
Ron
Wyden,
D-Ore.,
in
a
recent
letter
to
the
Biden
administration.

“When
borrowers
are
in
collections,
on
average
their
Social
Security
benefits
are
estimated
to
be
reduced
by

$2,500
annually,”
the
lawmakers

wrote
on
March
19. “This
can
be
a
devastating
blow
to
those
who
rely
on
Social
Security
as
their
primary
source
of
income.”

The
U.S.
government
has
extraordinary
collection
powers
on
federal
debts
and
it
can
seize
borrowers’

tax
refunds,
wages
and
retirement
benefits.
Social
Security
recipients
can
see
up
to
15%
of
their
benefit
reduced
to
pay
back
their
defaulted
student
debt,
which “can
push
beneficiaries
closer
to
—
or
even
into
—
poverty,”
the
lawmakers
wrote.

After
the
pandemic-era
pause
on
student
loan
payments
expired
in
October
of
last
year,
the
U.S.
Department
of
Education
said
it
wouldn’t
resume
its
collection
practices
for

12
months.

However,
the
lawmakers
wrote, “we
are
concerned
that
borrowers
will
face
the
extreme
consequences
associated
with
missed
payments
when
protections
expire
in
late
2024.”

They
asked
the
Biden
administration
to
provide
a
briefing
on
its
efforts
to
address
the
issue
by
April
3.

More
from
Personal
Finance:

FAFSA
fiasco
may
cause
drop
in
college
enrollment,
experts
say

Harvard
is
back
on
top
as
the
ultimate ‘dream’
school

More
of
the
nation’s
top
colleges
roll
out
no-loan
policies

The
U.S.
Department
of
Education
did
not
immediately
respond
to
a
request
for
comment.

The
government’s
collection
practices
with
student
loan
borrowers,
including
the
garnishment
of
wages
and
Social
Security
benefits,
is
an
area
under
review,
a
source
familiar
with
its
plans
told
CNBC.

Outstanding
student
debt
has
been
growing
among
older
people.
To
that
point,
more
than
3.5
million
Americans
aged
60
and
older
had
student
debt
in
2023,
a
sixfold
increase
from
2004,
according
to
the
lawmakers.

Consumer
advocates
say
the
government’s
collection
actions
are
extreme.

“Many
retirees
need
their
Social
Security
benefits
to
survive,”
said
higher
education
expert
Mark
Kantrowitz.

Social
Security
benefits
constitute
nearly
all
income
for
one-third
of
recipients
over
the
age
of
65,
the
lawmakers
said
in
their
letter.
The
average
check
for
retired
workers
is

$1,907
this
year,
according
to
the
Social
Security
Administration.

The
garnishments
mean
older
adults
are
often “forced
to
choose
between
skipping
meals
or
rationing
medicine,”
Kantrowitz
said. “It
is
a
morally
bankrupt
policy.”