More retirees see SS checks reduced for student loans
For Unpaid College Loans, Feds Dock Social Security
More retirees are falling behind on student debt, and Uncle Sam is coming after their benefits.
By ANNAMARIA ANDRIOTIS
AUGUST 7, 2012, 3:18 P.M. ET
It's no secret that falling behind on student loan payments can squash a borrower's hopes of building savings, buying a home or even finding work. Now, thousands of retirees are learning that defaulting on student-debt can threaten something that used to be untouchable: their Social Security benefits.
According to government data, compiled by the Treasury Department at the request of SmartMoney.com, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees' Social Security checks on those grounds. That's nearly double the pace of the department's enforcement in 2011; it's up from around 60,000 cases in all of 2007 and just 6 cases in 2000.
The amount that the government withholds varies widely, though it runs up to 15%. Assuming the average monthly Social Security benefit for a retired worker of $1,234, that could mean a monthly haircut of almost $190. "This is going to catch an awful lot of people off guard and wreak havoc on their financial lives," says Sheryl Garrett, a financial planner in Eureka Springs, Ark.
Many of these retirees aren't even in hock for their own educations. Consumer advocates say that in the majority of the cases they've seen, the borrowers went into debt later in life to help defray education costs for their children or other dependents. Harold Grodberg, an elder law attorney in Bayonne, N.J., says he's worked with at least six clients in the past two years whose problems started with loans they signed up for to help pay for their grandchildren's tuition. Other attorneys say they're working with older borrowers who had signed up for the federal PLUS loan -- a loan for parents of undergraduates -- to cover tuition costs. Other retirees took out federal loans when they returned to college in midlife, and a few are carrying debt from their own undergraduate or graduate-school years....
http://www.washingtonpost.com/business/economy/senior-citizens-continue-to-bear-burden-of-student-loans/2012/04/01/gIQAs47lpS_story.html
Washington Post: Senior Citizens Continue to bear burden of student loans
By Ylan Q. Mui,
April, 2012
The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens.
New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.
....
That even seniors remain saddled with student loans highlights what a growing chorus of lawmakers, economists and financial experts say has become a central conflict in the nation’s higher education system: The long-touted benefits of a college degree are being diluted by rising tuition rates and the longevity of debt.
....
“A student loan can be a debt that’s kind of like a ball and chain that you can drag to the grave,” said William E. Brewer, president of the National Association of Consumer Bankruptcy Attorneys. “You can unhook it when they lay you in the coffin.”
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I'm confused about this. Found this on the ssa.gov site FAQ just now:
Garnishing Social Security benefits due to a debt - Updated 06/04/2012 03:09 PM | ID# 426
Can creditors such as credit card, mortgage or auto loan companies garnish Social Security benefits to pay a debt?
No. If a creditor other than the federal government tries to garnish your Social Security benefits, inform them that such an action violates Section 207 of the Social Security Act (42 U.S.C. 407).
Section 207 bars garnishment of your benefits. It can also be used as a defense if your benefits are incorrectly garnished. Our responsibility for protecting benefits against garnishment, assignments and other legal processes usually ends when the beneficiary is paid. However, once paid, benefits continue to be protected under section 207 of Act as long as they are identifiable as Social Security benefits.
NOTE: Supplemental Security Income payments cannot be levied or garnished.
Source: http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/426/~/garnishing-social-security-benefits-due-to-a-debt
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And this:
Garnishing Social Security benefits - Updated 06/04/2012 03:09 PM | ID# 1712
Can Social Security benefits be garnished, levied or otherwise withheld by the Federal government?
There are a number of circumstances when the Federal government can garnish Social Security benefits.
Social Security will garnish benefits:
To enforce child support or alimony obligations under 42 USC 659.
To enforce a valid garnishment for court-ordered victim restitution under 18 USC 3613.
To collect unpaid federal taxes under 26 USC 6334(c).
To have a portion of your check withheld to satisfy a current year federal income tax liability under 26 USC 3402 (P).
Other federal agencies will offset benefits to collect money from benefits to pay a non-tax debt owed to that agency according to the Debt Collection Act of 1996 (Public Law 104-134).
Source: http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/1712/~/garnishing-social-security-benefits
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The second article in the OP from the Washington Post cited this (under "New Research" - 2nd paragraph from NY Fed):
<snip> (bold = mine)
The outstanding student loan balance now stands at about $870 billion,1 surpassing the total credit card balance ($693 billion) and the total auto loan balance ($730 billion). With college enrollments increasing and the costs of attendance rising, this balance is expected to continue its upward trend. Further, unlike other types of household debt such as credit cards and auto loans, the student loan market is incredibly complex. Numerous players and institutions hold stakes at each level of the market, including federal and state governments, colleges and universities, financial institutions, students and their families, and numerous servicers and guarantee facilitators.
Student loans have received considerable media attention in recent months as researchers and policymakers voice growing concern about the heavy debt loads assumed by students and their parents. In addition to worries about the volume of outstanding student debt, there is concern about having enough federal aid to support the large number of students taking up postsecondary education. Federal and state governments are deeply involved in the student loan market, either directly originating student loans or indirectly guaranteeing them. The Health Care and Education Reconciliation Act, signed into law last year, ended private lending of federally subsidized loans, approved expansion of Pell Grants, and appropriated funds to invest in institutions that serve minority and low-income populations. Still, advocates for students clamor for more to be done to increase the availability of student loans. Further, state budget cutbacks to higher education amid tight fiscal circumstances may result in higher tuition.
In October 2011, President Obama announced executive actions to cap monthly federal student loan repayment at 10 percent of discretionary income for college graduates, eased from the previous 15 percent. This cap comes as some relief to those who worry about how they will pay back their debt. Moreover, student loan debts are typically shouldered by recent college graduates and other young workers, who tend to face lower incomes and higher rates of unemployment than older cohorts...
Source: http://libertystreeteconomics.newyorkfed.org/2012/03/grading-student-loans.html
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Has something changed? I was of the understanding that student loans (similar to credit card, mortgage and auto loans) would be considered under this same "creditor" umbrella and not subject to SSI garnishment. Am I missing something and/or not understanding this correctly? 
SS is an insurance policy. Just like home, auto, life, health, etc.--an insurance policy. We pay premiums and its there for when we need it. Just like home, auto, life, health, etc, insurance policies.
Why are monies from an insurance policy being garnished? It's not a wage or a salary--it's an insurance policy.
It doesn't make since...but it's making me mad!
of note, today's Doonesbury
