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July 2019

I’m on Social Security – Why Can Debt Collectors Garnish My Benefits for Student Loans?

Washington Watch

 

If you think America’s college loan crisis – with more than $1.5 trillion worth of debt – is only a young person’s problem, think again. The federal government is now garnishing the fixed-income Social Security benefits of seniors in its crackdown to get people to repay student loans.

 

More than three million people over 60 are still paying off college loans. Many of these seniors took out loans to help their children, grandchildren or spouse pay off tuition and are still paying them off. Others took out student loans for themselves in the wake of the last recession, as they went back to school to boost their own employment prospects.

 

The numbers are simply staggering.

 

Americans age 60 and older owe more than $86 billion in unpaid college loans, according to the government’s Consumer Financial Protection Bureau (CFPB) and 40 percent of those over 65 are in default. Studies show that seniors default rates are almost double that of younger borrowers.

 

But the worst part is that many seniors are now having their Social Security benefits garnished to pay off these student debts. Student debt experts say that these seniors are the fastest growing segment of student loan borrowers.

 

The federal government is not cutting seniors any kind of break either and are driving tens of thousands of older Americans into poverty. While older borrowers are just a tiny sliver of the more than $1.5 trillion in total outstanding student loan debt, they are much more likely to be behind on payments.

 

Here are some of the staggering statistics.

 

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How Some Key Elements of the Tax Reform Bill May Affect Seniors

 

The long awaited, hotly debated tax reform bill finally passed and was signed into law on December 22. During the months of debate between the House and Senate versions of the bill, there was a lot of confusion about what was proposed, what was eliminated, and what made the final cut. The IRS even published the changes that were anticipated and relied upon, but are now changed.

 

Known as the Tax Cuts and Jobs Act (TCJA), it affects most everyone in various ways. Here are several parts of the final bill that will affect everyone who files tax returns, and some that will affect seniors more than most.

 

Personal and dependency exemptions and standard deductions.

 

Beginning in 2018 there is no such thing as a personal and dependency exemption, as these are eliminated. (In 2017 these exemptions were $4,050.) Standard deductions nearly doubled. They are:

  • $12,000 for singles (up from $6,350 in 2017)

 

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