Call to Shield Seniors’ Social Security from Student Loan Deductions Intensifies

Democratic lawmakers have come out in force this week with an open letter to President Joe Biden stating that some of the country’s most vulnerable are losing their access to Social Security due to their student loans. Here’s the full story.

Call to Halt Social Security Benefit Sanctions

Democratic lawmakers have said in an open letter to the Biden administration that millions of seniors are being denied their full Social Security benefits after defaulting on their student loans. They’re calling on Biden to stop this practice, which they argue is eroding “the well-being of vulnerable Americans.”

Student loan debts affect both the young and the old, but new figures indicate that more and more people over 60 are defaulting on their outstanding student loans. They’re witnessing some of the most rapid debt escalation in years, with statistics showing that almost 40% of over-65s with student loans are defaulting. 

This research was carried out in 2017, so it’s likely that the figure is higher now, following the cost of living crisis and other economic issues.

The Magnitude of Senior Student Loan Debt

Research from the think tank New America indicates that in 2023, almost 4 million Americans over 60 still held student loan debt –  worth around $125 billion in total. Despite the monetary benefits that college is estimated to provide, these borrowers end up at retirement age with the same level of savings as people who didn’t further their education but are mired in debt.

This amount of older people with student debt is six times more than it was in 2004, and the amount of debt owed is worth 19 times as much. 

Treasury Offset Program (TOP) Explained

If you have an outstanding student loan, the government can use your tax benefits and refunds to try to cover some of the debt. This is allowed under the Treasury Offset Program (TOP), a program that Democrats argue disproportionately hits those over 60. 

TOP lets the government withhold up to 15% of your benefits – even social security and disability – per month. This hits “roughly 44 percent of borrowers” aged 50 or over when they defaulted, to around $2500 a year. 

The letter states this is a “particularly devastating practice for seniors and people with disabilities who rely on Social Security as their sole source of income.” Typically, these people have been struggling for years to pay off their debt and are being hit with sanctions on their benefits.

Ineffectiveness of Benefit Offsets

The money the government takes from their benefits isn’t enough to affect their main loan. The letter explains that “more than 70 percent of the loan repayments collected through Social Security offsets were applied to fees and interest.”

Democrat Adam Schiff said, “We should eliminate as much student debt as we can for everyone, but especially for those who have spent decades of their lives working to pay it off.”

The Democrats who sent this letter, led by Elizabeth Warren, argue that “Offsetting Social Security benefits can push beneficiaries closer to – or even into – poverty.” They want Biden’s administration to exempt those on retirement, disability, and survivor benefits from TOP.

Importance of Social Security Benefits

A recent report from the Center On Budget and Policy Priorities found that “Without Social Security benefits, a staggering 38 percent of older adults would have incomes below the poverty line.” Biden’s administration has given out the most student loan relief of any incumbent president, most recently canceling around $6 billion for almost 80,000 public service workers. 

In total, almost 4 million Americans will have received debt relief, which is estimated to be around $138 billion. 

Whether he will extend this olive branch to those seniors in dire need remains to be seen, but Warren’s team of Democrats is trying to push him “to explore exempting Social Security retirement, survivor, and disability benefits from administrative offset due to student loan debt.”

The post Call to Shield Seniors’ Social Security from Student Loan Deductions Intensifies first appeared on Swift Feed.

Featured Image Credit: Shutterstock / Jonathan Weiss.

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