Lingering college-loan debt is not just the burden of millennials or even middle-aged adults. Older Americans, people over the age of 50 to be exact, are the fastest growing demographic with student debt, according to a report from the Government Accountability Office.
This trend has resulted in student debt for Americans ages 50 to 64 to soar four-fold over the last ten years, from $43 billion to $183 billion.
As the GAO report points out, federal law allows the government to garnish the Social Security benefits of borrowers over the age of 50 who have defaulted on their school loans. In 2015 alone, the U.S. government docked $171 million in Social Security payments from older Americans who defaulted on student loans, the GAO said. That practice helped shove tens of thousands of seniors below the poverty line, the report suggests.
Older borrowers (age 50 and older) who default on federal student loans and must repay that debt with a portion of their Social Security benefits often have held their loans for decades and had about 15 percent of their benefit payment withheld, the GAO says.
“This report shows us that seniors clearly aren’t immune to the student loan crisis — they’re deeply impacted by this issue to the point that it’s leaving many of them in a dire financial situation,” Senator Claire McCaskill, D.-Missouri, said in a statement. “We could have hundreds of thousands of American seniors living in poverty due to garnished Social Security benefits if this trend continues, and we shouldn’t allow that to happen.”
Older borrowers subject to these “offsets” — as the withheld amounts are referred to in the GAO report — increasingly receive benefits below the federal poverty guideline. Specifically, many older borrowers subject to offset have their Social Security benefits reduced below the federal poverty guideline because the threshold to protect benefits—implemented by regulation in 1998—is not adjusted for costs of living.
GAO said it is recommending that Congress consider adjusting Social Security offset provisions to reflect the increased cost of living. GAO is also making five recommendations to Education, “including that it clarify documentation requirements for permitted relief resulting from disability.”