(PatriotWise.com) — A group of Democratic lawmakers last week called on the Biden administration to take action to prevent those who default on their federal student loans from being denied their full Social Security benefits, Axios reported.
In a March 19 letter to Social Security Administration Commissioner Martin O’Malley, Education Secretary Miguel Cardona, and Treasury Secretary Janet Yellen, the lawmakers, led by Massachusetts Senator Elizabeth Warren, highlighted the current policy of offsetting Social Security benefits to pay off student loans that are in default.
The lawmakers said the policy had a “devastating” impact on seniors and those on Social Security disability who rely on that money as their sole source of income.
Americans over 60 are one of the fastest-growing groups with outstanding student loans.
According to research from Boston College’s Center for Retirement Research, in 2019, the average reduction in annual Social Security benefits for those whose student loans are in collections was about $2,500. That amounts to between 4 and 6 percent of their annual household income.
However, the number of those on Social Security who have defaulted on their student loans is relatively small. Currently, less than 5 percent of Social Security beneficiaries have student loan debt.
At the same time, the balances on student loan debt are expected to be significantly higher for future Social Security beneficiaries, according to the research.
For beneficiaries whose student loans are delinquent, the withholding amount is either 15 percent of their monthly Social Security benefit or the amount that exceeds $750 a month, whichever is lower.
CNBC reported last year that approximately 2.7 million Americans ages 62 or higher accounted for $107.3 billion in federal student loans as of September 2023.
The Center for Retirement Research estimated that for those currently between the ages of 35 and 61, the annual delinquency offset to Social Security benefits is expected to increase to $2,594 by the time they retire, up from the $2,299 those over 62 were paying in 2019.
In their letter, the Democratic lawmakers requested a briefing from Secretary Yellen, Secretary Cardona, and Commissioner O’Malley by April 2.
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