Can the Government Seize Social Security Checks to Pay for Delinquent Student Loans?

 Posted on March 18, 2021 in Student Loans

When most people think of student loan debt, they usually picture someone who has recently graduated from college within the past few years, who, along with that diploma they earned, now owes thousands and thousands of dollars in student loans. Many young adults can be so overwhelmed with student debt, with threats of wage garnishments and other heavy-handed collection tactics, that they are unable to pay their other bills. Quite often, the only option they have to get out from all that debt is to file bankruptcy. Although student loans cannot be discharged in bankruptcy, other debts can, and this may free enough income for them to be able to afford their monthly student loan payments.

But it is not just young adults who are being buried with student loan debt. More and more older people, including the elderly, are struggling with it. It is estimated that approximately seven million Americans over the age of 50 have student loan debt.

Can the Department of Education Seize Social Security Benefits?

Not only can the Department of Education seize tax returns and wages of people who are delinquent in student loans, but they can also withhold money from a person’s Social Security check. Social Security disability checks can also be garnished.

And the government definitely does go after those Social Security checks. According to the Consumer Financial Protection Bureau (CFPB), the number of people 60 and older with student loans quadrupled from about 700,000 to 2.8 million individuals in one 10-year period, alone. The average amount of those loans also increased from $12,000 to $23,500.

Many seniors who the Department of Education says are delinquent in their decades-old student loans, thought the loans were paid in full and no longer have the paperwork to prove it. Interest and penalties on the loans have piled up and the original loan amount is nowhere near what the government is now trying to collect. For example, a person who owed $3500 for a student loan from 1975 now owes over $20,000.

Even though a person is supposed to be notified before deductions are taken from their Social Security check, many seniors have no idea it is going to happen until the funds are being removed. In most cases, the notifications are being mailed to the address that was on file when the person took out the loan years ago, not the current address where the Social Security checks are being mailed to.

Social Security recipients who are having their checks garnished by the Department of Education do have some options that may help:

• Apply for a disability waiver to see if you qualify to have the loans canceled.
• Apply for financial hardship.
• Consolidate all student loans.
• Rehabilitate loans by working out new payment plans.

Contact a New Braunfels Bankruptcy Attorney for Help

Whether you have retired or not, if you have crushing student debt, speak with a dedicated Boerne bankruptcy attorney from the Law Offices of Chance M. McGhee to find out what options you may have to help alleviate the financial strain these loans are causing you and your family. Call 210-342-3400 today to schedule a free and confidential consultation.

Sources:

https://www.aarp.org/money/credit-loans-debt/info-2017/student-loans-debt-repayment-retirement.html

https://www.aarp.org/money/credit-loans-debt/info-2018/student-loans-garnish-ss.html

https://www.gao.gov/products/gao-17-45