Haunted by Student Debt to the Grave

[LongTomH]

It will not be news to 41 million Americans that this nation is in the middle of a student debt crisis. That’s the number of people burdened by student loan payments. But many people, including many student debt holders, may be surprised to learn that people can be pursued for student debt even into their elder years.

In fact, the government is withholding Social Security payments for some retirees because their student loans have not been fully repaid. This is a growing problem that Sens. Elizabeth Warren (D-Mass.) and Claire McCaskill (D-Mo.) have asked the government to study in greater depth.

“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,” said Sen. McCaskill. “Social Security is the sole means of retirement income for tens of millions of Americans, and allowing those benefits to be garnished to collect student loan debt cuts a dangerous hole in our safety net.”

That is one problem with this practice. But, as we will see, there are others.

Many people will be surprised to learn that any seniors are still paying off their student debt. They are: 706,000 households headed by someone 65 or older are still paying off their student debts, according to a report by the GAO. Collectively these households owed $18.2 billion in 2013. That’s six-and-a-half times as much as they owed in 2005, when these senior households’ total debt obligation was “only” $2.8 billion.

Of those households, 191,000 – more than one in four – are in default. The government can take up to 15 percent of a Social Security check to pay back a student loan, as long as the monthly check amount does not drop below $750 a month.

Social Security payments could not be seized for any reason until – for the first time ever — Congress created an exception for student debt in 1996. Before then, Social Security was protected from garnishments of any kind. That was deliberate. The original Social Security Act of 1935 stated that benefits were not “subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.”

Read more here: http://ourfuture.org/20150728/haunted-by-student-debt-to-the-grave?utm_source=progressive_breakfast&utm_medium=email&utm_campaign=pbreak

[global1]

1. So Is This Why All The Politicians Talk About A Good Education?.....

So they could saddle people with debt that they have to pay until they die. This seems like a form of slavery.

It is sad because so many young people just out of college and wanting to start their career and life are saddled with student debt.

They find it hard to afford a wedding. They can't get a loan to buy a house. They are having a tough time finding a decent paying job that won't work them to death for meager wages. They can't start a family. All this because they just can't afford it.

Think about what would happen to the economy if their was student loan relief. All the money that they would have been paying off their student loans with - would be able to go to buying a house. Furnishing the house. Paying property taxes. Paying sales taxes on the furnishings they buy. They would be able to start a family. They would be able to take a vacation. Go to a restaurant. Go to the theater.

It would be a stimulus to the economy. Instead - their is this heavy burden looming over their heads.

We can spend money - Citizens United money for campaigning to buy Senators, Congressmen and Presidents. We can spend money for wars. But we can't give relief to the people that were sold on going to school and getting a good education.

What a sad state of affairs we have.

[erronis]

8. The Education Corporation of America likes it that way

Saddling as many people with ridiculous student loans for essentially worthless degrees and obviously worthless education seems to be the model that US capitalism is built upon.

When I drive through old suburbs surrounding cities on the East Coast I see hundreds of new "colleges" that have sprung up to siphon money from the aspiring.

The mantra that a college education is the entrance to a good life is a good lie. It was foisted on the population by capitalists. The best education is experience, apprenticeship, interning, networking.

Sure, if you want to be hired by a NYC law/banking firm, you might want to go to an Ivy League. But you won't be hired anyway unless your father plays golf with someone from the firm.

Work at Walmart? If you are too smart or educated, you'll probably be rejected.

Work at a nice small business? They're being squeezed by the same megacorps.

Makes you want to live a country where there are possibilities and freedom!

[TBF]

2. K&R for visibility - good article. nt

[Igel]

5. No, it's a horrible article.

It creates outrage but doesn't inform.

1. A recent, similar article was anecdotal, but relevant. The woman involved had her benefits garnished. She'd taken out student loans for a certification program when she was in her mid-50s. It didn't improve her lot in life so she couldn't pay them off. A decade later she retired.

This is different from taking out a student loan when you're 21 and not paying it off by the time you retire at 65.

How stale are the loans? How many date back decades? How many date back less than a decade? How many are fairly recent, but still in default?

Let's not even mention the wisdom of taking out a large loan for a low-paying certification fairly late in life. We don't like stupidity; but foolishness is the American way of life these days.

2. It's the households that owe the debt. How many of the SS recipients (1) contracted for the debt directly, (2) cosigned on student loans in the past and are now on the hook, (3) are heads of household where some dependent owns the debt?

These are three different categories, but all three hit the SS recipient. They also have different solutions. I'd want a breakdown of the percentages before I get my nappies in a knot.

3. The government gives itself perks. It always has. It always will. If the government subsidizes student loans, as it has for decades by making them cheaper through federal guarantees or making the loans themselves, then it's going to be in line for payback. Anything less is, in fact, a moral hazard that the government has no recourse for: I'll take out $60k in loans when I'm 63, screw the government because I'm retiring tomorrow and they can't touch my income.

I could go on. Interest versus principle? Private versus public versus tech/vocational schools? Size of average loan?

Remember: The government is always your friend and to think badly of the government is bad.

[TBF]

6. Making up stories "a recent, similar article"

in order to express your right-wing outrage isn't going to help you here.

The issue, in my view, is that we are basically forcing folks to take out student loans because they don't have other options (check out the level of income inequality in this country before allowing your head to further explode). Teenagers entering college do this in order to have a shot at what they think is a future. As opposed to working at Walmart for $7.50/hour or dealing drugs from their family's apartment. Also older Americans will take a chance on going back to school after republicans (and some democrats) ship millions of jobs overseas and they find themselves pink-slipped at 40+ - good luck finding a new job at that point.

This isn't an isolated issue. It's part of the entire American nightmare (I refuse to call it a dream) that we are all living right now. If you've inherited money or paid to post on the Internet by the Koch Bros. you're probably still doing ok - but most Americans are not in those boats. Most Americans are working more hours for less money (if they can find jobs at all) while the billionaires at the helm frolic at will.

Enjoy it while it lasts, comrade.

[fasttense]

3. The interest and fines added on when a student is in default

Is just ludicrous.

These poor people can't afford to pay back their loans so we add more money on for them to pay back. If they can't pay back the original debt plus huge interest, why do we think they can pay back even more?

Letting bankers get rich off the poverty of our students. What a self destructive social plan.

[chillfactor]

4. I am one of those seniors...

who has had my social security check garnished by the government..I am 73 years old, depend on my social security to get me through life, I am disabled and cannot work..I lose $300/month in benefits...

[yurbud]

7. Jesus. they'll cut your SS?