Old Student Debt Can Cancel Retirement

[Tekward]

Senior citizens with old student debt can become permanent debt slaves.

"According to the GAO study, the number of individuals whose Social Security benefits were offset to pay student loan debt increased from about 31,000 to 155,000 between 2002-13."

BBC News - US seniors face student loan debt

 

[tryan]

I can only imagine the penalty associated with decades of deferred debt.

Hard to feel sorry for them thou. Had a vacancy couple months ago 2 different students wanted the house with no income except thier student loans. Rejected both ... looked like living off credit cards to me.

 

[TimSF]

Anyone know if there are limits on what portion of a SS check the US can garnish to repay student debts?

 

[ls99]

Shocked these folks would not pay off their stundent loans. No sympathy from me at all. More like absolute contempt.

I paid my touition in cash up front from my own pocket, each semester. Granted I was working full time at the time.

 

[imoldernu]

Anyone know if there are limits on what portion of a SS check the US can garnish to repay student debts?

Details here:
Can Social Security Be Garnished? | Bankrate.com

Different situations (student debt) (unpaid childcare) and some time limits.

 

[43WorkYears]

Hard to imagine there are people approaching or collecting social security and have outstanding student loans off their own schooling.

How can that be. What have well educated people done during their career. They must have screwed up.


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[TimSF]

Thanks for the link, IMOLDR. For those interested (and too lazy to check the link), here is the answer: "The government can shave off up to 15 percent, provided your remaining monthly benefit doesn't drop lower than $750."

 

[rodi]

If you cosign your kids (or grandkids) student loans they can garnish your SS.

I suspect that big increase in SS garnishment is due to parents and grandparents cosigning and their kids/grandkids not paying the loans back.

It's a reason I will never cosign a student loan for my kids. Worst case I'd borrow entirely on my credit - probably using a HELOC - so I have control over how it gets paid back and control of the risk of default.

 

[CaliforniaMan]

I know that many people misuse debt, but I guess it never occurred to me that seniors on SS would still have their own student loan debt to pay off. This level of financial mismanagement just seems beyond belief.

 

[Walt34]

I've heard of it before but I find it incredible that so many people would be so foolish. I should know better - foolish people gave me a career.

 

[youbet]

"The government can shave off up to 15 percent, provided your remaining monthly benefit doesn't drop lower than $750."

That seems very reasonable. If this reduction pushes them into poverty, then that's what welfare is for.

 

[pb4uski]

The vast majority of older borrowers took out their loans in order to pay for their own studies, although a small percentage used the loans for their spouses, children or grandchildren.

Many borrowed money to pay for mid- or late-career retraining, or may have acquired loans with a very long repayment term. Others defaulted at a younger age, were unable to dig themselves out of the problem and carried it through into retirement.

I admit to having little sympathy for those who defaulted on student loans earlier in life and that bad decision is coming back to haunt them later in life. I suspect that they thought that they were getting away with it.

In all cases, if they had just lived within their means and paid their bills like the vast majority of people do they would not have the problem.

 

[imoldernu]

I admit to having little sympathy for those who defaulted on student loans earlier in life and that bad decision is coming back to haunt them later in life. I suspect that they thought that they were getting away with it.

In all cases, if they had just lived within their means and paid their bills like the vast majority of people do they would not have the problem.

For the most part, I'd agree, but the world is a funny place. Younger persons aren't commonly thinking of the day they may need Social Security. Over the years, I've known many people who have, for one reason or another defaulted on loans or failed to pay for services
... Home repossessions
... Entrepreneurial failed business ventures
... Divorce
... Extensive medical costs

....all without affecting Social Security...

So how does this work? With $1.3 trillion is student loans... Who made the loan? Who guaranteed the loan? Banks? Federal Government? Student Loans Guaranteed by the Federal Government

So, now... the student defaults on the loan and compounds the interest costs, and the theoretical amount owed doubles... Who is at risk?

Why is not paying a student loan for $30,000 different from not paying a hospital bill for the same amount?

 

[ChiliPepr]

Why is not paying a student loan for $30,000 different from not paying a hospital bill for the same amount?

because student load debt is a debt to the government (or government agency) and you cannot bankrupt yourself out of the debt... sort of like not paying your taxes...

 

[kramer]

One of my American neighbors here in the Philippines is in his mid-to-late-40's, thinks America is the great evil and will fail any day now, and will be in this situation when he is older. From my understanding, he got a US government student loan for graduate school (chiropractor) and never paid on it. He also had four kids in the USA and left the country (so he must owe child support, two of his children are still minors). He has probably been here for around 8 years.

Before I knew him very well and he told me about the student loans, I told him that this could jeopardize his social security which he laughed off saying that America will be broke anyway. He also just laughed off that he owes this debt. Ironically, his mom is sending money from the great evil America to help support his new family here in the Philippines.

ANYWAY, his American passport is up for renewal in a couple of years. The latest passport renewal form (I just filled it out for myself) requires a social security number, so he will have to provide that (there is actually a financial penalty if you send in the form without it). Will past due child support (California, I think) and unpaid federal student loans disallow him to renew his passport? This would force him to go back to the USA.

He is afraid to ever go back to the USA, stating that he might get arrested at the airport. Also, there is some kind of criminal record there but he served his time, as far as I know. Ironically, he is a model family man here. But this is affecting his family now -- he is refusing to move forward on getting US citizen status for his children here, worried about drawing attention to himself. When it comes to passports, FATCA/FBAR, income taxes, and visa status -- I always warn new expats to not get out of status! Many foolishly ruin their life abroad. I certainly have no sympathy for this guy.

 

[EastWest Gal]

He is the "model family man" as long as Grandma sends him money. Something is wrong with this picture. Defaulted on student loans (which means the rest of us citizens are footing his bill). Not much of an example of responsibility, is it?


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[kramer]

He is the "model family man" as long as Grandma sends him money. Something is wrong with this picture. Defaulted on student loans (which means the rest of us citizens are footing his bill). Not much of an example of responsibility, is it?

You are absolutely correct. What i mean though is that he seems really dedicated to his family here, spends most of his spare time with his kids, works hard at his chiropractic business, doesn't cheat on his wife, completely gave up alcohol after being an addict, and even helps take care of an elderly neighbor in need. Probably at least part of this was simply forced upon him by poverty. You don't want to go and live hand to mouth (no savings) in a poor country!

 

[Senator]

One of my American neighbors here in the Philippines is in his mid-to-late-40's, thinks America is the great evil ...

he is refusing to move forward on getting US citizen status for his children here

If the USA is so much of an evil, why would he want citizenship for his kids? Seems like an oxymoron.

 

[haha]

Hard to imagine there are people approaching or collecting social security and have outstanding student loans off their own schooling.

How can that be. What have well educated people done during their career. They must have screwed up.


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Their only error was in not reading ER.org religiously. If they had so done, they would have found all the information they needed to learn how to engineer their lives so as to pay a portion, then get the rest cancelled. It's all here.

Ha

 

[kramer]

It is his wife who wants the US citizenship for them, as any good parent would. He would go along with it, probably, except for fear of being singled out regarding these issues. She has asked me to research it.

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[papadad111]

Lots of bad apples running around ... See it all the time after 25 years on the road. Expats on the run from one thing or another.

Have personally known several who would most likely be detained on arrival back in their home countries -- some specifically select country A or country B due to non-extradition. Typically a lower type of criminal case against them And almost always running away from Unpaid debts, child support and such judgments against them. Some real winners. Not.

Always amusing when after knowing them casually for a bit they sorta ask for money or a loan or to invest in their wife's latest (chick, pig, fish ) business that's gonna be a sure thing ....

Run Forrest run.

 

[M Paquette]

ANYWAY, his American passport is up for renewal in a couple of years. The latest passport renewal form (I just filled it out for myself) requires a social security number, so he will have to provide that (there is actually a financial penalty if you send in the form without it). Will past due child support (California, I think) and unpaid federal student loans disallow him to renew his passport? This would force him to go back to the USA.

He's boned.

Child support Payments and Getting a U.S. Passport

And on the DS-82 renewal form, back side:

Your Social Security number will be provided to the U.S. Department of Treasury, used in connection with debt collection and checked against lists of persons ineligible or potentially ineligible to receive a U.S. passport book and/or card, among other authorized uses.

 

[RunningBum]

If you cosign your kids (or grandkids) student loans they can garnish your SS.

I suspect that big increase in SS garnishment is due to parents and grandparents cosigning and their kids/grandkids not paying the loans back.

It's a reason I will never cosign a student loan for my kids. Worst case I'd borrow entirely on my credit - probably using a HELOC - so I have control over how it gets paid back and control of the risk of default.

I would guess you are right about the co-signing being the big increase.

I'm curious on your reasoning for borrowing on your own credit instead of co-signing. I've started co-signing a student loan for my future daughter-in-law. It's a long story I won't get into, but basically if I hadn't done that she probably would have to drop out and throw away what schooling she's finished, and it felt good to help out someone who's had some rough breaks in life.

Anyway, I'm figuring she's inclined to pay back a loan with her name on it. If it was in my name only, she might view it as lower priority. Either way, I know I'm on the hook for it if she doesn't pay it off, but this way she has skin in it.

Am I missing something, other than perhaps being able to get a better interest rate? I suppose she could miss payments without me knowing until my credit is dinged as well, but I can monitor the account too.

 

[rodi]

My reasoning is that the payments and statements are usually sent to the primary borrower, not the cosigner. So if the cosigner gets in a pickle, but is too embarrassed, or has some other reason to not fess up - you could have your credit in default and never know it.

If I had the cash, and felt the child, DIL, whomever was a good credit risk - I would lend it to them directly. Same risk. Borrower has the same amount to pay back. But I know if the payments are being made.

Lets just say there's a situation in my extended family where a child didn't make payments on a cosigned student loan and failed to defer the payments... It was a very rude awakening for the parents who cosigned. I'd rather not be rudely awoken if I had the means to know if payments were actually being made.

But that's just me and my thinking.

 

[RunningBum]

My reasoning is that the payments and statements are usually sent to the primary borrower, not the cosigner. So if the cosigner gets in a pickle, but is too embarrassed, or has some other reason to not fess up - you could have your credit in default and never know it.

If I had the cash, and felt the child, DIL, whomever was a good credit risk - I would lend it to them directly. Same risk. Borrower has the same amount to pay back. But I know if the payments are being made.

Lets just say there's a situation in my extended family where a child didn't make payments on a cosigned student loan and failed to defer the payments... It was a very rude awakening for the parents who cosigned. I'd rather not be rudely awoken if I had the means to know if payments were actually being made.

But that's just me and my thinking.

Yeah, having to monitor the account to make sure it's not running late is going to be a pain if I don't trust her to keep it up but at least I know that I can see it. I also read that after graduation, if she makes 12 payments on time I can be released as a co-signer, but she'd also have to qualify to repay the rest of the loan on her own. Hopefully with hers and my son's income they will by then.

Thanks for replying to my question.