Lawmakers Seek to End Social Security Garnishment Among Student Debtors
Elizabeth Warren filming a video with the CFPB for a project unrelated to this article.
Lawmakers from a handful of states including Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont are backing a bill that would prevent the government from garnishing Social Security disability and retirement benefits from people who failed to pay back their student loans.
According to the official congressional website, Senate Bill 959 was introduced by Senator Ron Wyden, a Democrat from Oregon along with several cosponsors including Senators Warren (D-MA), Sanders (I-VT), and Sherrod Brown (D-OH). This marks the second time lawmakers have tried to safeguard student loan borrowers who defaulted on their student loans from social security garnishment. Despite the good intentions, these Senators face an uphill battle this year. In 2015, they introduced a similar bill that was never enacted into law.
In an interview with MarketWatch, Senator Brown acknowledged that getting the bill passed will be a challenge, but he said that he is hopeful some lawmakers will respond to what has become a growing concern among constituents in many states around the country. “Senators and House members are hearing about this problem more and more. We’re hearing all kinds of people calling us surprised that [the government] can do this,” Brown said in the interview.
While much of the attention is focused on recent college graduates when it comes to student loan debt, plenty of older workers are being drowned by their own student loan debt which is often glanced over. Earlier this year, the Consumer Financial Protection Bureau (CFPB) released a report that showed student loan debt has quadrupled over the last ten years for consumer aged 60 and older according to LendEDU’s coverage. The CFPB estimated that older consumers owed $66.7 billion in student loan debt at the end of 2015 alone, becoming the fastest growing group of debtors in the student loan market. Back in 2005, the number of older student loan borrowers stood at around 700,000. That figure has jumped to 2.8 million as of 2015.
What’s more, a Government Accountability Office (GAO) report issued in December showed that the number of student loan borrowers who are losing out on some of their Social Security benefits increased 540 percent from 2002 to 2015. One of the main culprits is the increasing cost of college during the past several years affecting those paying for their own schooling or that of a child or multiple children. It’s not just seniors that are defaulting on their student debt either. According to recent data, LendEDU found that the national default rate stands at 11.8 percent with more than 7 million people in the U.S. defaulting on their loans.
In addition to stopping the government from garnishing social security disability and retirement benefits, Senator Brown wants lawmakers to increase funding support for Pell grants, enable borrowers to refinance federal student loans into lower interest rate loans, and commit additional funding to community colleges to make them more accessible according to LendEDU’s congressional report. “Americans work hard and earn their Social Security and it shouldn’t be taken away by student debt,” he said, “It’s just government punishing them and it shouldn’t work that way.”
Image Copyright © Consumer Financial Protection Bureau
Student Loan Guides
Student Loan Reviews