Se­niors deep in col­lege debt de­fault

The Washington Times Daily - - POLITICS - BY STEPHEN DINAN

More than 6 mil­lion Amer­i­cans over age 50 still carry stu­dent loan debt, and about a third of them are in de­fault, ac­cord­ing to a new gov­ern­ment study Tues­day that warned the gov­ern­ment is even dock­ing the So­cial Se­cu­rity checks of tens of thou­sands of se­nior cit­i­zens to make them pay off what they owe.

A ma­jor­ity of the old­sters con­tracted their debt mid­ca­reer, and some were pay­ing off loans they took for their chil­dren. But oth­ers racked up their bills decades ago yet are still strug­gling to get it taken care of, the Gov­ern­ment Ac­count­abil­ity Of­fice said.

Some 870,000 peo­ple over the age of 65 owe stu­dent loans to­tal­ing $22 bil­lion in debt, and 37 per­cent are in de­fault. Of those ages 50 to 64, 29 per­cent are in de­fault.

For those re­ceiv­ing So­cial Se­cu­rity, ei­ther be­cause they’ve re­tired or are col­lect­ing dis­abil­ity, the gov­ern­ment can siphon money straight out of their checks. The av­er­age monthly pay­ment was cut $140 for those in ar­rears — in ad­di­tion to a $15 penalty fee each month, GAO au­di­tors said.

The gov­ern­ment can dock up to 15 per­cent of some­one’s So­cial Se­cu­rity check, which the GAO said eats up an in­creas­ingly large share of fixed in­comes.

“A grow­ing num­ber of older bor­row­ers may ex­pe­ri­ence fi­nan­cial hard­ship in the years lead­ing up to or dur­ing re­tire­ment be­cause the So­cial Se­cu­rity off­set thresh­old has not been ad­justed for in­creases in costs of liv­ing since pro­gram pro­vi­sions were im­ple­mented by reg­u­la­tion in 1998,” the GAO said.

Some peo­ple whose So­cial Se­cu­rity checks are at the lower end may even qual­ify for a sus­pen­sion of col­lege debt re­pay­ments, but many of those aren’t aware of the as­sis­tance, the au­dit found.

Older folks are more likely to have larger debts. Just 10 per­cent of those ages 50 to 64 had $50,000 in stu­dent debt, while 15 per­cent of those 65 and older had that much.

The Ed­u­ca­tion Depart­ment is try­ing to au­to­mat­i­cally sus­pend off­set pay­ments for peo­ple on dis­abil­ity. But the GAO said the depart­ment isn’t telling bor­row­ers about the sus­pen­sion, and many of them are rack­ing up more in­ter­est that could even­tu­ally come due once they switch from dis­abil­ity to reg­u­lar So­cial Se­cu­rity.

“Un­less a bet­ter method is de­vel­oped to al­low them to ver­ify their an­nual in­come dur­ing the 3-year mon­i­tor­ing pe­riod, the ma­jor­ity of loans may be re­in­stated after ini­tially be­ing ap­proved,” the au­dit said.

The Ed­u­ca­tion Depart­ment agreed with all five of the GAO’s rec­om­men­da­tions for trans­parency and ac­tion.

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