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.
Read more: http://www.smartmoney.com/borrow/student-loans/grandmas-new-financial-problem-college-debt-1344292084111/
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.
Read more: http://www.smartmoney.com/borrow/student-loans/grandmas-new-financial-problem-college-debt-1344292084111/
1 comment:
Taking out a student loan can lead even to more serious consequences than you can guess. On one hand, it can help you to get a job, make a career and find your place in life, but on the other hand it can make you a person who is deeply in debt, living through cash advances for bad credit and can’t get a job. Unfortunately, college degree doesn’t give us a guarantee of degree and that’s why so many people lose their hopes. I think that it’s better to try to save money for college and do your best to avoid a loan because it can be very complicated to pay it off then.
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