A new proposal from Senator Bernie Sanders could shield millions of older Americans and people with disabilities from having their Social Security benefits reduced because of unpaid federal student loans. The newly proposed legislation, called the Stop Social Security Garnishment Act, would prohibit the federal government from garnishing Social Security payments to collect defaulted student loan debt. The bill is expected to be formally introduced when the Senate returns next month and has already been backed by Senators Elizabeth Warren and Ed Markey.
That is beyond unacceptable,” Sanders said in a statement. This is especially true when seniors throughout the country already cannot afford the skyrocketing price of healthcare, prescription drugs, groceries and housing. Congress must pass this legislation.” Roughly 9 million to 9.5 million borrowers are currently in default on federal student loans.
And while student loan debt is often associated with younger borrowers, millions of older Americans also carry education debt, either from their own schooling or from loans taken out to help children and grandchildren attend college. According to a fact sheet released by Bernie Sanders' office, more than 3 million Americans over age 62 carry student loan debt. And more than one-third of Social Security recipients with student loans rely on those payments to meet basic living expenses.
Garnishing Social Security benefits can create hardship, especially for older borrowers living on fixed incomes. And according to Sanders’ office, half of Social Security beneficiaries whose benefits were garnished because of defaulted student loans have reported skipping medical care or prescriptions because of cost. If enacted, the Stop Social Security Garnishment Act would: The proposal would generally amend existing law that currently permits the government to recover defaulted student loan debt through offsets of federal benefits.
Under current rules, the government can garnish up to 15 percent of a monthly Social Security payment to collect defaulted federal student loans. In June of last year, the administration said that it would not cut Social Security benefits for affected borrowers, reversing an earlier plan to resume collections following pandemic-era relief measures. And the Department of Education later delayed wage garnishment and other involuntary collections while implementing new repayment options.
However, the pause is not necessarily permanent, and a future administration or policy change could resume Social Security offsets unless Congress voted to protect against this. Some have their reservations about the proposal as a matter of fiscal policy, though. However, as U.S. debt approaches $40 trillion and GDP slows, how much, if anything, can we simply afford to write down?” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
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