Sens. have said that millions of older Americans could lose their Social Security benefits if they can’t pay back their student loans. Democratic senators wrote emails to the Treasury Department, the Education Department, and the Social Security Administration (SSA) asking them to do something about the risk that seniors with student loans face.
The Treasury Offset Program (TOP) collects late payments from local, state, and federal government offices. If Social Security recipients don’t follow their repayment plans, they could lose up to 15% of their monthly benefits.
Social Security beneficiaries have their benefits reduced due to defaulting student loans
The March 19 letter was signed by Elizabeth Warren of Massachusetts, Ron Wyden of Oregon, and fourteen other lawmakers. It was an expression of worry about how TOP unfairly affects older borrowers, who often have the most trouble making their loan payments.
The group has also asked that benefits like Social Security retirement, survivors, and disability payments not be affected by student loan debt.
A liberal think tank called New America found this in an article mentioned in the letter: in 2023, over 3.5 million Americans aged 60 and up still had student loan debt. This was six times more than in 2004. It’s now $125 billion in debt, which is 19 times more than it was in 2004.
At around the same time, a lot more people whose Social Security benefits were cut because they didn’t pay their student loans rose. A report from the Government Accountability Office says that this problem affects 173,000 people in 2015, up from about 36,000 workers in 2002.
Lawmakers say that people whose debts are in collections see their Social Security payments cut by about $2,500 a year. People who depend on Social Security as their main source of income may take a big hit from this.
About 44% of borrowers who were 50 or older at the time of their first offset were affected by the maximum Social Security income offset, according to the lawmakers. In the letter, it is said that the Social Security offset could make loans poorer or even less wealthy.
They said that the collections also go against the goal of the Social stability Act, which is to protect the general welfare, basic economic stability, and well-being of Americans who are weak. Congress stopped a break in loan payments and interest during the coronavirus pandemic in October 2023.
This meant that millions of federal borrowers could start making payments again. Under his Savings on a Valuable Education Plan, President Joe Biden has worked to get rid of or lower student loans.
What will happen with the student loan forgiveness from the Biden Administration?
The last few years have been terrible for people with student debt. Month after month, money was kept from them. Some of the loan was taken away, and then it wasn’t. Now that the last government deferral time is over and payments are due again, millions of Americans are thinking about their student loans.
Here is all the information you need about how to get your student loans forgiven right now, including President Biden’s new Savings on a Valuable Education (SAVE) Plan and legacy programs based on your business.
But in June 2023, the Supreme Court threw out President Biden’s one-time scheme to lower student loans. The plan would have forgiven between $10,000 and $20,000 in government student loan debt for people with certain amounts of income.
There are still ways to get your loans cleared, even though the court’s decision means it won’t happen right away. More than that, President Biden’s new SAVE Plan (which is described after this piece) can lower monthly payments by a lot.
The following steps have been taken since April to forgive more than $100 billion in student loans for more than 3.7 million borrowers:
- Fixes and modifications to public service loan forgiveness (PSLF): $56.7 billion
- Updates to income-based repayment programs: $45.6 billion
- Aid for eligible borrowers with permanent disabilities: $11.7 billion.
- $22.5 billion in relief for debtors who qualify for borrower defense, are affected by school closures or have been involved in lawsuits.