Katie Brazis
May 2017

Democrats Move to Protect Social Security Benefits from Student Loans

Student loan debt is truly an epidemic, spread across the country and through all age groups. According to the Consumer Financial Protection Bureau, the number of borrowers age 60 and older has quadrupled in the last decade. They also owe more than ever before. This is happening for two reasons: students are carrying their debt later into their lives; and more parents and grandparents are taking out loans or co-signing their children’s loans so they can attend college.

Parent PLUS loans that help parents get their children through school are often much riskier than regular student loans. They are harder to pay back with a lower interest rate and fewer repayment options. Additionally, they are very easy to get. The government only checks an applicant’s credit report for serious delinquencies or defaults in the past five years or so. They don’t evaluate whether the applicant will be able to pay back the loans. And parents can take out enough loans for each child to get through college, no matter how much debt they accumulate in the process.

It’s not a surprise to see that almost 40 percent of borrowers 65 years and older are in default.

Older borrowers face different challenges paying back loans than younger borrowers. Whereas younger borrowers see their loans as investments from which they expect to see returns through improved job prospects, older borrowers see only debt. Additionally, many borrowers age 65 and older have only social security checks to live off of. But if they have student loans in default, they can see smaller benefits after their checks have been garnished to pay off the loans.

The ability for the government to garnish social security payments originated in a 1996 law. The law added a provision requiring $750 to remain in the checks after garnishing. But that number has not increased with inflation since the 90s. Now, 20 years later, $750 per month— $9,000 per year — is well below poverty level for people age 65 and older, according to the United States Census Bureau 2015 data.

In 2015, over 67,000 borrowers 50 or more years old had their benefits garnished below poverty level.

Hoping to help seniors with their debt, Ron Wyden, D-Ore., and Sherrod Brown, D-Ohio, are championing a bill that will prevent social security garnishment. With support from many cosponsors including Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., Wyden and Brown are hoping this bill will fare better than a similar one that failed in 2015. Success of this bill means more security for older borrowers.


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Katie Brazis

Katie is a Content Coordinator with a BA in English and a Certificate in Editing and Publishing from CSU, Chico, and a Certificate in Copyediting from UC San Diego Extension. In addition to her professional history in editing, she has a deep love of stories. In her free time — when she’s not trying to tame the wild beast she calls her cat — Katie consumes stories in any form. She reads books and watches shows and movies. She plays cooperative games, both video and board, with her husband and friends. When she chooses to venture outside she keeps her phone handy to catch some virtual Pokemon.

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