More than 700,000 U.S. households headed by people 65 and older are living with student debt. According to a 2014 report from the Government Accountability Office, these older Americans still owe more than $18 billion in student loans. About 27 percent of these loans are in default for people between 65 and 74 and more than half of these loans are in default for people 75 and over. All in, about three percent of households headed by someone over 65 holds student debt.
The federal government can seize up to 15 percent of the Social Security check of retirees in default to pay back student loans. Since most older adults rely on Social Security benefits for half or more of their income, that’s a hefty chunk of money. And, often the lowest paid workers claim Social Security benefits at 62, reducing their benefits by 25 percent. Many policymakers now agree that we need to expand Social Security benefits and former Labor Secretary Robert Reich has a short video explaining why we can afford to do so.
The government has the right to go after student loans that are in default while you are working, but that requires the government to sue and get a court order. It’s far easier for the government to seize Social Security benefits directly. Under the law, the government can either attach funds or seize Social Security funds that have been in the bank for more than two months.
Of note, the number of Americans 50 and older with student loan debt has grown significantly in the 21st century, from 3 million in 2005 to 6.9 million in 2012. Benefits were offset for about 36,000 retirees over 65 in 2013, six times as many as in 2002. And the amount of debt grew more than six-fold between 2005 and 2013, to $18.2 billion. More than 80 percent of the debt was for people’s own education, and about 18 percent for a child or grandchild.
If you’re not sure whether you still owe money on a student loan, call the U.S. Department of the Treasury’s Bureau of the Fiscal Service (800 304-3107) If you owe money, you might want to contact your local legal aid office to see if staff can help you work out a viable loan repayment plan. And, if you want to learn what your Social Security benefits will be when you retire, click here.