Education, From The Capitol To The Classroom

How Student Loan Debt Can Follow You To Retirement

FLICKR / 401(K) 2012

The number of retirees whose Social Security payments have been reduced over student debt has increased.

College students worried about being saddled by student loan debt in their 20s take note — an increasing number of older borrowers are watching repayments come out of their Social Security.

So far this year, the federal government has withheld money from 115,000 retirees who have fallen behind on student loan payments, writes SmartMoney‘s AnnaMaria Andriotis. In 2000, there were just six such cases.

It’s not as unusual for retirees to be paying down student loans as you might think. Nearly 2.2 million student loan debtors are older than 60, and about a tenth have payments more than 90 days past due, Andriotis notes.

The federal student loan program began in the 1960s, and access increased over the next decade. Jason Delisle and Clare McCann over at Ed Money Watch do a nice job of explaining why we’re seeing a sudden increase in the number of retirees with student loan debt:

So it stands to reason that so few retirees had their Social Security checks nabbed back in 2000 to repay their student loans because they probably didn’t borrow federal student loans to attend college in the mid-1970s. For example, a retiree who was 62 in 2000 would have been about 37 years old in 1975, past the typical age for higher education.

But someone who turned 62 in 2012 would have been in his prime student loan borrowing years – in his early 20s – right around the time federal student loans became widely available. Retirees claiming benefits at age 65 in 2012 would have been in their late 20s in the mid-1970s.

So the increase we’re seeing today is simply the first generation of borrowers aging into Social Security, right? Andriotis says no.

“But in most cases, these loans aren’t even their own loans,” she told NPR‘s Renee Montagne. “And that’s what makes this whole situation really sad.”

In some cases, it’s actually Mom and Dad — or even Grandma and Grandpa — borrowing to pay for their kids’ education, though the data doesn’t track what kinds of loans are in default.

Parents behind on their PLUS loans can see their monthly Social Security payment reduced by 15 percent, or about $190 from the average $1,200 check.


  • broke

    I have to say that this could mean the federal government pushes someone into poverty level while repaying the student loan debt from trying to provide their children with a better life than they had. I am a single parent with one income working 10 hour days full time and caring for 2 — not just one! — elderly parents — one with Alzheimers and the other with cancer. I don’t make payments to my child’s student loan because there is no money… period! I told Sallie Mae that perhaps I will get something when my parents pass and was asked “When will that be?” I was MORE than APPALLED!!! I didn’t ‘plan’ this to happen…. I intended to pay them off shortly after graduation but life dealt me a different hand and I’m doing the best I can at 60 years old. I’ve never married so I have no spousal support. My only asset is my house. I’ve tried countless times to negotiate with them to no avail. When I obtained the parent plus loan their formula said that I made enough money that I didn’t really qualify for any grants. Their FAFSA formula is inaccurate as it takes into account the average income for the entire state and, unfortunately, I live in a higher cost of living area and have my entire life. They were allowing people with incomes of $35K to get grants and have no student loan debt but me? No way! I made $20K more and I was RICH! Ha! Try living in this metro area with the politicians continually in your pocket and gas and the necessities like food continue to rise but does my salary? No… the company I’ve been with for 13 years couldn’t afford to give anyone a raise. I’ve never been a ‘deadbeat’ with any debt, never filed bankruptcy or had a car repossessed. I’ve only bought 2 new cars in my entire life the last of which was 35 years ago! So tell me….. just HOW does the federal government who needs my money so bad to give it to companies that pay their officers huge bonuses then file bankruptcy expect me…. just a paltry single parent who has never been in any financial trouble or any other trouble for that matter…. to even SURVIVE while trying to live at an advanced age? I keep hearing that insurance premiums will be going up so when I reach the age to actually get on Medicare, I won’t be able to live then either! All I hear is that the federal government is trying to get DEEP into my little shallow pockets and make me go broke at an age where I can not compete mentally or physically with the younger generation in the job market let alone my not having a degree myself. I am certainly open to any logical suggestions. At this point, I feel like handing Uncle Sam a shovel and telling him to just cover me up….. I’m done.

    • Bonnie

      I agree! Yet they allow Stafford loans to be forgiven. So what does that mean we are paying for them also. So unfair

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