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Wednesday, 27 August 2014 08:51

Shaking Down the Elderly for Student Loan Debt Should Not Be Allowed


studentelderly(Photo: Occupy Posters)

An August 21 Bloomberg Businessweek article raises a shocking dilemma: Money is being garnished from senior citizens' Social Security checks for unpaid student debt.

How is it possible that the elderly may still owe money for college education, and how can anyone live on meager Social Security income, when the federal government is docking – in some cases - thousands of dollars a year?

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In the article, "Student Debt Threatens the Safety Net for Elderly Americans,"  Bloomberg Businessweek states the facts bluntly:  

Until his Social Security check arrived almost $300 lighter last June, Eric Merklein, 67, didn’t know he had outstanding student debt. He’d taken out a loan about 40 years ago to attend Southern Illinois University and believed it had been repaid by his grandmother after he graduated in the early 1970s. When he contacted the Department of Education to ask why he was getting less in his check, Merklein says he was surprised to learn the government was withholding a portion of his benefit to cover the debt.

Merklein is among the more than 2 million Americans age 60 and older carrying student debt, up from about 700,000 in 2005, according to the Federal Reserve Bank of New York. The debts are from old loans like Merklein’s and more recent ones that older Americans take to go back to school or pay for college for their kids. In total, this group has $43 billion in unpaid loans, five times what they owed in 2005. The average debt also has risen by more than 60 percent since 2005, to around $20,000 per borrower older than 60....

From January through July of this year, the government withheld money from the Social Security checks of 140,000 people, according to Department of Treasury data. A decade ago, a third as many seniors lost part of the benefit to pay off loans.

As the post World War II boomer population gets older, the financial squeeze on many older people is likely to increase:

As baby boomers age, student loan debt is likely to become a bigger problem. Some 4.7 million Americans in their fifties owe education debt, up from 2.3 million in 2005, and the total amount is three times as high as it was nearly a decade ago, according to the Treasury Department. 

Given that individuals are paying off accumulated interest on the loans, some will inevitably die in debt without ever having even made a large dent in the principal owed. No relief is in sight, since a bill that would have allowed high-interest student loans to be renegotiated failed to pass the Senate a couple of years ago.

Shouldn't our government be assisting its seniors in living out their years in comfortable retirement, rather than forcing many of them to ration food to pay off student loans from years ago - or still outstanding debt on loans taken out for their children when they had jobs?

Why not just forgive the interest on all student loans owed by anyone receiving Social Security? Or, as a consumer attorney suggests in the Bloomberg Businessweek article, forgive the loans entirely for seniors in financial need?

Better yet, why not - to avoid this situation in the future - make public higher education free?

That would certainly end the fleecing of our elderly in years to come.

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