Student Loan Collections Push Older Borrowers into Poverty
According to a new National Consumer Law Center report, Pushed into Poverty: How Student Loan Collections Threaten the Financial Security of Older Americans, the federal government's draconian student loan collection policies increasingly force older adults into poverty by seizing Social Security benefits to repay defaulted student loans.
Social Security provides a crucial safety net that typically accounts for the majority of an older adult's cash income, and, in many cases, it accounts for nearly all of the older adult's income. Without Social Security, almost half of all older adults aged 65 and over would fall below the poverty line.
According to the Consumer Financial Protection Bureau, the number of consumers age 60 and older with student loan debt has quadrupled over the last decade. Sadly, nearly half of all older borrowers aged 65 and over have already defaulted on their federal student loans and now risk having their Social Security benefits seized.
Many of these older borrowers already struggle with affording basic living needs and are forced to forgo essential healthcare needs, such as prescription drugs and doctor's visits, in order to satisfy outstanding loan payments. Furthermore, there is no statute of limitations on student loan collection and very few bankruptcy options exist, which means older borrowers could have their Social Security benefits seized for the rest of their lives.
To combat this problem, Senators Ron Wyden (Ore.) and Sherrod Brown (Ohio) have introduced the Protection of Social Security Benefits Restoration Act (Senate Bill S. 959). This bill prohibits the government from seizing older borrowers' Social Security disability and retirement income for defaulted student loans.
Please call your U.S. Senators and urge them to support Senate Bill S. 959.
John Gear is a Salem attorney in solo practice