Paying Off Student Loans With Your Monthly Social Security
Student loans. Social Security. They don’t seem to have any obvious links.
If you’re old enough to collect Social Security, the law that makes repaying student debt a federal government-backed obligation was not on the books when you went to college. Besides, Social Security income can’t be dunned by anyone for any reason. Those collecting Social Security always know this income will arrive in full once a month.
All this is obvious, right? Wrong!
There are now more than two million Americans, 60 and older, who are student loan debtors, and many are behind in their payments. Some of them owe this money because they went back to school in middle age to boost their resumes in hopes of landing new jobs. Some returned to school simply for personal enrichment. They ran up government-backed student loans in the process.
The largest number of these two million, however, were simply co-signers for their children’s or grand children’s college loans. The kids deserved a shot. They needed that sheepskin to get it. Their parents or grand parents signed the loan papers to make it possible and are now on the hook to pay it back if the kids or grand kids can’t — a situation not all that uncommon these days.
While most kinds of debt collection can’t touch Social Security income, debt to federal agencies (like the VA, for example) or debt guaranteed by the federal government (like student loans) can be dunned by the Treasury. In consequence, thousands of older Americans collecting Social Security are now finding that part of their monthly checks (up to 15 percent) are being withheld because of student loans that are in default.
Ain’t that a kick in the head. Sure, you sacrificed all those years to give young family members a leg up. Now, in addition, the income, often the only income, that keeps you going in old age is getting trimmed.
Yet another example of one generation’s interests being pitted against another generation’s interests. Welcome to the new America.