Social Security checks reduced for unpaid student loans

[❤ mollymouser ❤]

Wow.
www.wsj.com/articles/social-security-checks-are-being-reduced-for-unpaid-student-debt-1482253337

excerpt:

WASHINGTON—The federal government is increasingly taking money out of recipients’ Social Security checks to recover millions in unpaid student debt, leaving thousands of retired and disabled Americans with below-poverty incomes, according to a report set to be released Tuesday.

The government has collected about $1.1 billion since 2001 from Social Security recipients of all ages over unpaid student loans, the Government Accountability Office reported. That includes $171 million in Social Security benefits in fiscal 2015 alone.

In the year through September 2015, about 114,000 Americans age 50 and older had their Social Security benefits reduced to offset defaulted student loans. That figure—which includes 38,000 people age 65 or older—has risen 440% since 2002.

[billisonboard]

Government being run more like a business?

[NomoreDramaQ1015]

They tell you that when you sign for the loans.   I took mine out back in the early 2000s and they made it clear if you default long enough that they can seize your SS and any future tax returns to pay back what you owe.

I am not sure why people don't understand you are on the hook till you die.   My paperwork made sure to mention that about 20 times.

I do think that the student loan industry will be the next to crumble.   Eventually they will hit a wall and not be able to collect all that they've loaned out.  The college system will then collapse as well because they won't be raise tuition with the safety of knowing that students can just keep borrowing more and more.

[emma1420]

I have two minds about this.

On one hand I do think people who be responsible for the loans they take out until they are paid off or until they die, whichever comes first.

On the other hand, I tend to feel that many of those student loans were taken out without all the appropriate information, and many students were given an inaccurate picture of their earning potential after they graduated (assuming they did), especially in many for-profit colleges (although non-profits are also off the hook).   When I was adjuncting I met a lot of students who seemed to think they were going to make six figures with their associate degree in criminology and no experience.  And so for those people I do feel bad for them and I feel like they were taken advantage of, especially when I see them in the same job that they had before they went back to school earning less than $10 an hour.

[zibazinski]

If you're that stupid you have no business in college or reproducing.

[suesinfl]

My XH is going to be in a world of dodo. They are all ready taking is tax refund and the dumbass didn't even finish. Thankfully this was many years before I met him, unfortunately, I didn't find out until after we were married. I was not a happy camper.

[movinonup]

Dec 20, 2016 16:10:41 GMT -5 NomoreDramaQ1015 said:

I am not sure why people don't understand you are on the hook till you die.   My paperwork made sure to mention that about 20 times.

Well there's your problem... you actually read the paperwork.

[raeoflyte]

I have a real beef with the current state of student loans.  Private loans up to unworldly amounts on nothing but a hope and an e-signature that can never be discharged.  Smells like predatory lending to me.  

[tskeeter]

Dec 20, 2016 17:20:29 GMT -5 emma1420 said:

I have two minds about this.

On one hand I do think people who be responsible for the loans they take out until they are paid off or until they die, whichever comes first.

On the other hand, I tend to feel that many of those student loans were taken out without all the appropriate information, and many students were given an inaccurate picture of their earning potential after they graduated (assuming they did), especially in many for-profit colleges (although non-profits are also off the hook).   When I was adjuncting I met a lot of students who seemed to think they were going to make six figures with their associate degree in criminology and no experience.  And so for those people I do feel bad for them and I feel like they were taken advantage of, especially when I see them in the same job that they had before they went back to school earning less than $10 an hour.

Hm, I went to a not for profit state college back in the mid 70's.  I don't remember anyone on the college staff ever talking with me about what kind of money I could earn after I got a degree.  They seemed to expect that I would figure that out on my own.  And I did.  By word of mouth and from conversations with recent graduates.  As a business major, I managed to avoid unreasonable expectations, such as thinking I would get a Gates like salary fresh out of school.  Was my judgement that much better than the judgement of today's young people?  Or are the unreasonable expectations of today's youth the result of parents not raising kids in a fashion where the kid learned how to exercise good judgement?

[souldoubt]

I think predatory lending is one of those terms that gets used when it isn't always applicable.  If you're inebriated, under duress or not mentally capable of making a legally binding agreement that's one thing but that doesn't apply in a lot of cases where people use the term.  I've heard of lenders making some ridiculous loans living in one of the mortgage crisis capitols of the country but at the end of the day there are two people or parties to the contract and they both agreed to it.  I find it hard to have any pity for either side especially when the lendee isn't making the agreed on payments.  

[emma1420]

Dec 20, 2016 19:03:08 GMT -5 tskeeter said:

Dec 20, 2016 17:20:29 GMT -5 emma1420 said:

I have two minds about this.

On one hand I do think people who be responsible for the loans they take out until they are paid off or until they die, whichever comes first.

On the other hand, I tend to feel that many of those student loans were taken out without all the appropriate information, and many students were given an inaccurate picture of their earning potential after they graduated (assuming they did), especially in many for-profit colleges (although non-profits are also off the hook).   When I was adjuncting I met a lot of students who seemed to think they were going to make six figures with their associate degree in criminology and no experience.  And so for those people I do feel bad for them and I feel like they were taken advantage of, especially when I see them in the same job that they had before they went back to school earning less than $10 an hour.

Hm, I went to a not for profit state college back in the mid 70's.  I don't remember anyone on the college staff ever talking with me about what kind of money I could earn after I got a degree.  They seemed to expect that I would figure that out on my own.  And I did.  By word of mouth and from conversations with recent graduates.  As a business major, I managed to avoid unreasonable expectations, such as thinking I would get a Gates like salary fresh out of school.  Was my judgement that much better than the judgement of today's young people?  Or are the unreasonable expectations of today's youth the result of parents not raising kids in a fashion where the kid learned how to exercise good judgement?

I went to college in the 90s and my job prospects weren't discussed at all.  I had to figure it out. And I did have some less than reasonable expectations about what I would earn when I finished school.   But many institutions (including the ones I went to) now provide the types of jobs one can expect to obtain post-graduation.  Many of these jobs are achieveable, with significant experience in the field.  And for many students, especially in the for-profit sector, they get told they will be able to get all these types of jobs that pay in these ranges, and they don't have anyone in their life to let them know it's not that way.

[suesinfl]

Dec 20, 2016 17:53:09 GMT -5 zibazinski said:

If you're that stupid you have no business in college or reproducing.

For probably most, I would agree, but sometimes there are circumstances out of their control. Disability, serious illness, etc. Life rarely turns out as people plan in their younger years. I know mine didn't turn out like I thought it would when I was in my 20s, 30s, or 40s.

[Rukh O'Rorke]

are these only for federal student loans - or private as well?

[giramomma]

Dec 20, 2016 19:13:28 GMT -5 emma1420 said:

 But many institutions (including the ones I went to) now provide the types of jobs one can expect to obtain post-graduation.  Many of these jobs are achieveable, with significant experience in the field.

My alma mater now offers a one credit course open to all L&S majors on how to get career ready.

Amusingly enough, the course is called "Taking Initiative."

If it were up to me I'd call the course "I  eating and living in a place with walls."

[sesfw]

When I was in DeVry 1991-93 at the age of 50 I was there on every student loan and grant I could get.  But I did it with my eyes wide open.  I'm the type that has always paid my debts.

I knew my AA degree was a dead-end degree, and a couple of my classmates in their 20s told me about that with surprise in their voices.  These are also the ones that told me they were not going to pay their loans back.

I can't fault DeVry for lack of information given, I can fault my classmates for selective hearing.

When I got out with my little AA after 5 terms (total 19 months) I was $17K in SL debt.  I found a job so Bill could work part-time for a while.  We bought a home and I paid back all of my debt.

[justme]

Dec 20, 2016 19:49:22 GMT -5 Rukh O'Rorke said:

are these only for federal student loans - or private as well?

Just federal. Only federal can take tax returns or social security. Private can get judgements, but I dunno if they can get it that way?

[CCL]

There's always the option of starting out at a community college and paying cash like I did.

These students are not 12 years old. They are supposedly "adults."

[tskeeter]

Dec 20, 2016 19:13:28 GMT -5 emma1420 said:

Dec 20, 2016 19:03:08 GMT -5 tskeeter said:

Hm, I went to a not for profit state college back in the mid 70's.  I don't remember anyone on the college staff ever talking with me about what kind of money I could earn after I got a degree.  They seemed to expect that I would figure that out on my own.  And I did.  By word of mouth and from conversations with recent graduates.  As a business major, I managed to avoid unreasonable expectations, such as thinking I would get a Gates like salary fresh out of school.  Was my judgement that much better than the judgement of today's young people?  Or are the unreasonable expectations of today's youth the result of parents not raising kids in a fashion where the kid learned how to exercise good judgement?

I went to college in the 90s and my job prospects weren't discussed at all.  I had to figure it out. And I did have some less than reasonable expectations about what I would earn when I finished school.   But many institutions (including the ones I went to) now provide the types of jobs one can expect to obtain post-graduation.  Many of these jobs are achieveable, with significant experience in the field.  And for many students, especially in the for-profit sector, they get told they will be able to get all these types of jobs that pay in these ranges, and they don't have anyone in their life to let them know it's not that way.

Sounds a bit like the story told by a co-worker after a recruiting trip to Harvard.  He said that every one of the dozen or more people he talked to expected to be the CEO of a .Fortune 500 company within five years.  Talk about a future of disappointment.  They obviously ignored all of the articles and other information about all of the Harvard business school grads who were working in low paying jobs in both the public and private sectors.  And the simple math that shows there aren't enough Fortune 500 CEO jobs to accommodate all those grads.  Even for just a couple of years in that role.

Aspirations are great, but an understanding of reality is a good thing, too.

[phil5185]

Hm, I went to a not for profit state college back in the mid 70's. I don't remember anyone on the college staff ever talking with me about what kind of money I could earn after I got a degree. They seemed to expect that I would figure that out on my own. And I did. By word of mouth and from conversations with recent graduates. As a business major, I managed to avoid unreasonable expectations, such as thinking I would get a Gates like salary fresh out of school. Was my judgement that much better than the judgement of today's young people? Or are the unreasonable expectations of today's youth the result of parents not raising kids in a fashion where the kid learned how to exercise good judgement?

I remember discussions about what I should expect to earn when I was in HS. A HS Counselor discussed it when we met to review college test scores, possible college selection, etc. When I was a jr in HS (1955) I was told that Engineers earned $500/m.  But I remember having no feel for what things cost - how much was rent, what does food cost, etc?  On the farm, I didn't know anyone who rented, all our neighbors had farms. Food? Eggs are in the hen-house, you need milk, go milk a cow. Meat? - butcher something.  BTW, the $500/m was fairly accurate, that's what my first engineering jobs paid.

But back then, you got a degree in engineering, business, math, physics, accounting, history, or education.  No gender studies, no BA in interdisciplinary studies, no degree in Russian poetry - you could take those classes as electives but no such degrees were offered.   So the chances of ending up with a BA-in-Useless was much lower.   And I was never advised to "take what you love" and spend time 'finding myself'.  And I definitely as never offered a 'safe space' to cry/mourn when my choice for prez didn't win.   (Actually we were given the afternoon off in 1963 when JFK was assassinated.)

[resolution]

I have a friend that hasn't filed her tax return in several years because she says the student loan collections will just intercept her refund anyway. We have been trying to convince her to file and let them take the refund, but she literally would rather let her refunds rot than pay back her debt.

I have a feeling she will be in for a big surprise when they get ahold of her SSA check.

[CCL]

For those getting their tax refunds intercepted, wouldn't it be a simple thing to lower their withholding throughout the year? Then there would be no refund to lose. They'd even take home more on their regular paychecks.

Oh well, they need to pay their debts, regardless. Noone gives me a break on mine.

[sbcalimom]

Someone in my family attended an incredibly pricey for profit photography school and ended up almost $300K in debt. The school was later part of a class action lawsuit and ended up admitting all kinds of wrongdoing in loans like telling students not to read the paperwork, steering students towards more expensive loans because they got a kickback from the lender, over inflating job stats for hiring after graduation and income, and that's just to name a few. The students got like $1K back but were still on the hook for all their loans. The school got fined some obscene amount of money and lost their ability to provide federal loans - shortly thereafter I think they closed.

I think the school has HUGE culpability here and the students are getting royally screwed. But, the students also have some responsibility because they didn't read the paperwork even though they were told not to. 

I think the entire student loan industry and college tuition levels will have to be overhauled though before anything changes. Federal loans have fairly reasonable caps on them but when tuition is so ridiculously high private loans come to save the day. And some private loans, are pretty much on par with payday lenders.

[Deleted]

Dec 21, 2016 1:07:28 GMT -5 CCL said:

For those getting their tax refunds intercepted, wouldn't it be a simple thing to lower their withholding throughout the year? Then there would be no refund to lose. They'd even take home more on their regular paychecks.

Oh well, they need to pay their debts, regardless. Noone gives me a break on mine.

Anyone who feels it's better to forfeit their refund to the government by not filing instead of having the government apply it to their outstanding student loans is not all that financially savvy. 

[whoisjohngalt]

I've said it before and I'll say it again and again and again - teaching basic personal finance classes in High School HAS TO BE MANDATORY .     That and LEARN TO READ BEFORE YOU SIGN ANYTHING.

That being said - at some point everyone has to grow up and pay up for the mistakes they might have made in their youth.  I don't see how this should be an exception.

I actually wish that there were other debts that people couldn't simply discharge and had to it off one way or another. 

[tractor]

I'm trying to figure out how they end up with super high federal student loans. My son only qualifies for $5,500-$7,500 per year in federal loans. Even if he maxed out it would be $23,000 or so. We are not using any federal loans so he shouldn't have to worry about it.

[NomoreDramaQ1015]

Dec 21, 2016 9:36:10 GMT -5 tractor said:

I'm trying to figure out how they end up with super high federal student loans. My son only qualifies for $5,500-$7,500 per year in federal loans. Even if he maxed out it would be $23,000 or so. We are not using any federal loans so he shouldn't have to worry about it.

Private loans.   I don't know what the terms are now but when they made their appearance back when I was in school they heavily advertised I could take out as much as $80k. .. without a co-signer!

The interest rate ranged anywhere from 2%-19% adjustable.

I stayed far far away from them.   It meant I had to be a transfer student but the idea of being on the hook for $80k for life at 19% interest scared the crap out of me.   Something seemed wrong about the idea that at 18 years old I could borrow that much money.

They get all the perks of being a pay day loan combined with being non-dischargable like federal loans.

I can understand why federal loans should be non-dischargable.   IMO private loans should be just that. .. private loans.  You want to give kids $80k you risk not getting paid back.   You want to enjoy the perks that federally backed loans do then your interest rate should be capped and borrowing limits imposed just like federal loans.

Maybe not as low a limit as federal loans but the idea that I could borrow $80k without any kind of collateral is insane.  I can buy a house around here for that much money!

Before anyone jumps down my throat concerning "How will some people pay for school without private loans!!!", I get it.   Private loans are a tool.   So are adjustable rate mortgages and even pay day loans.   When used smartly they are a benefit to certain people.

That's not how private loans are marketed to 18 year olds.   There are no discussions of other options they may have or paths they may take.    When I told the HS counselor I was going the transfer route instead of helping me they spent the rest of the semester trying to convince me to take out private loans because "Didn't I want to go to the same school all four years?"

That's not how something you're on the hook for for life should be marketed anymore than buying a house should be marketed.   It should be pounded into your head that this is a very serious financial decision you don't sign lightly.

I think a course in finance hosted by a neutral third party should be mandatory before you sign up for your student loans.   Parents/grandparents can attend too.   You shouldn't be signing something based on a HS counselor's advice and who happens to be getting perks for every student she gets to sign the paperwork.    You wouldn't trust a mortgage lender who is getting kick backs, you'd say it was a conflict of interest.    Same should apply with student loans.

[Deleted]

Dec 21, 2016 9:45:19 GMT -5 NomoreDramaQ1015 said:

Dec 21, 2016 9:36:10 GMT -5 tractor said:

I'm trying to figure out how they end up with super high federal student loans. My son only qualifies for $5,500-$7,500 per year in federal loans. Even if he maxed out it would be $23,000 or so. We are not using any federal loans so he shouldn't have to worry about it.

Private loans.   I don't know what the terms are now but when they made their appearance back when I was in school they heavily advertised I could take out as much as $80k. .. without a co-signer!

The interest rate ranged anywhere from 2%-19% adjustable.

I stayed far far away from them.   It meant I had to be a transfer student but the idea of being on the hook for $80k for life at 19% interest scared the crap out of me.   Something seemed wrong about the idea that at 18 years old I could borrow that much money.

They get all the perks of being a pay day loan combined with being non-dischargable like federal loans.

I can understand why federal loans should be non-dischargable.   IMO private loans should be just that. .. private loans.  You want to give kids $80k you risk not getting paid back.   You want to enjoy the perks that federally backed loans do then your interest rate should be capped and borrowing limits imposed just like federal loans.

Maybe not as low a limit as federal loans but the idea that I could borrow $80k without any kind of collateral is insane.  I can buy a house around here for that much money!

But it's just Federal that they are garnishing SS for right?

I'm guessing after decades of not paying they racked up tons of interest, penalties and late charges, otherwise it doesn't make sense with the federal loan caps.

[NomoreDramaQ1015]

Looks like only federal can take your refund and SS checks.   Private has to get a judgement against you and then try to collect/garnish wages.

If it's only federal then I don't get how you come to the point where your SS is seized.    You shouldn't be able to borrow enough to get that far in over your head.

Then at least my loan company is willing to bend over backwards till they snap to help you make your payments.  I was given a giant manilla folder before I graduated with my final loan balance, the terms and then stacks of paper listing all the ways the company could assist me if I found the calculated payment unaffordable.  Nowadays I get regular emails and on their web site in big red block letters it tells me if I am struggling to please call this number so they can assist.

Taking my refunds and SS check are the absolute last resort.  I'd have to have ignored the thousands upon thousands of notices I've recieved over the years to get to that point.

I ended up going with consolidation and that's kept my payment to where I could make it even at $20k/year.   It's depressing when I see how long I still have left of my term but at least I can make the payments.

[midjd]

You can borrow a lot more in federal loans for graduate school. The Graduate PLUS loan has "flexible limits" and is basically the COL in your chosen city + the cost of tuition and fees - any scholarships, etc.  

[NomoreDramaQ1015]

I still don't get it.   There are a lot of options for federal loan repayment if you simply call and ask.   You may not qualify for all of them but like I said my lender is willing to bend over backwards to assist.   They want to get paid back so it's in their best interest to figure out how to do it.  

Or is my company the only one that kills an entire forest in order to send you regular information about your loans and assistance for repayment?