Falling behind on student loans has long been a fear of many borrowers. Whether this dilemma stalled your ability to build savings, kept you from purchasing a car or home, or even cost you a dream job opportunity, student loan debt likely remains a roadblock to many borrowers’ financial freedom.
Now, defaulting on student loan debt is creating a whole new set of financial problems. The government has stepped in and begun withholding money from a growing number of Social Security recipients. The government has had the right to do this for some time, but up until recently had not acted with such determination. From January through August 6th of this year, the government reduced the checks of approximately 115,000 Social Security retirees. This figure is up from around 60,000 cases in all of 2001 and just 6 cases in 2000.
The government can take some federal benefit payments (including Social Security retirement benefits and Social Security Disability benefits, but not Supplemental Security Income) as reimbursement for student loans. However, the government cannot take any amount that would leave you with benefits less than $9,000 per year or $750 per month. And, it cannot take more than 15% of your total benefit. It is obvious that this reduction in Social Security for many retirees will cause a panic and most likely will disrupt any financial stability they once enjoyed.