The number of Americans whose Social Security checks are being garnished to repay student loans has tripled since 2006, according to a Treasury Department analysis done for CNNMoney.
Last year, 156,000 lost part of their checks this way, up from 47,500 eight years ago. The average taken is also up, now $180, while the average Social Security check is just $1,200.
The financial toll of an unbearable student debt load follows so many seniors because loans are nearly impossible to discharge in bankruptcy. The load can persist even after death. Social Security was originally meant to be protected from being garnished by creditors seeking payment, but those rules were relaxed for student loans in 1996 and unlike most other kinds of debt, there is no statute of limitations.
Social Security checks are already meager, but they do outsized work to keep people out of poverty. They’ll be less effective, of course, if recipients aren’t getting their entire checks.
The number of Social Security recipients losing part of their checks to pay back old student loans is likely to keep swelling. Today more than one in eight outstanding loans is in default and the default rate has increased by about 5 percent over the past year. More than one in five borrowers is a year or more behind on payments. More are taking advantage of income-based repayment plans that only require debtors to pay a certain portion of what they make, but those are still substantially under enrolled.
Relief for debtors could come in a perhaps better form: allowing borrowers to discharge their loans in bankruptcy. The Center for American Progress has proposed allowing this not for all loans, but those from private lenders charging double-digit interest rates or taken out to pay for schools that don’t have good employment track records for graduates.
And an even more direct way to help students afford college without getting mired in debt would be for the government to take the money it spends on college affordability through grants, tax breaks, and work-study funds and instead make all public college tuition free. That would not just give students a completely affordable place to attend, but likely drag down costs at private universities that would have to compete for students tempted by a free education.