As millions of older adults who are behind on their student loans face the potential of receiving smaller Social Security benefits, Democratic lawmakers are sounding the alarm. In a recent letter to the Biden administration, Sen. Elizabeth Warren and Sen. Ron Wyden highlighted the devastating impact that reduced benefits can have on those who rely on Social Security as their primary source of income.
The U.S. government has the power to seize tax refunds, wages, and even retirement benefits to collect federal debts from borrowers in default. Social Security recipients can see up to 15% of their benefit reduced to repay their student debt, pushing them closer to poverty.
Despite the pandemic-era pause on student loan payments expiring in October of last year, concerns remain about the consequences that borrowers will face when protections expire in late 2024. Lawmakers have called on the Biden administration to address the issue and provide a briefing on their efforts by April 3.
With outstanding student debt growing among older Americans, the collection practices of the government have come under scrutiny. More than 3.5 million Americans aged 60 and older had student debt in 2023, representing a significant increase from 2004.
Consumer advocates and higher education experts argue that the government’s collection actions are extreme and leave many retirees in a difficult position. Given that Social Security benefits constitute nearly all income for one-third of recipients over the age of 65, reduced benefits can force older adults to make difficult choices between essentials like food and medicine.
The issue of garnishing wages and Social Security benefits is raising concerns among lawmakers and advocates, as they call for more compassionate policies to address the financial challenges faced by older adults with student debt.
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