A handful of Americans are at risk of losing their benefits of Social Security according to the student debt that follows them into their golden years, according to a report by the New School’s Schwartz Center for Economic Policy Analysis, about 2.2 million United States citizens over age 55 still have outstanding student loans, and yes, of course, if your loans go into default, your Social Security retirement benefits may be affected and reduced.
Older Americans already make up the largest share of borrowers of student loans, with 43 percent, according to the report; Currently, the Social Security Administration takes over the benefits of Social Security to some extent if seniors have defaulted on their federal loans.
What Can Be Done to Avoid Losing Social Security Benefits?
Experts say that because of this situation, Americans must avoid the impact at all costs. Fortunately, for borrowers, there are some resources available for student debt that didn’t exist decades ago. In the Biden administration, the income-based repayment plan was approved to SAVE, which allows long-term borrowers to make small monthly payments or even have their debt forgiven entirely. “The sad thing about this situation is that, although the benefits of Social Security are at risk, the reality is that this problem is completely avoidable,” said Michael Lux, attorney and founder of Student Loan Sherpa.
“Borrowers who live on Social Security, They can often qualify for $0 monthly student loan payments. These $0 payments can continue indefinitely and eventually qualify for condonation of student loans ”. “The problem for many older American borrowers is the number of hurdles they must overcome to qualify for lower payments or full forgiveness,” Lux added.
“I encourage any older person with loans federal for students to investigate income-based repayment options, specifically the SAVE “Lux expressed. “It’s a great tool to ensure that student debt doesn’t destroy your retirement ”. “Those with Parent PLUS loans can even enroll in SAVE if they take advantage of the double consolidation loophole.”
What Could Be the Consequences if You Don’t Resolve Your Student Debt?
Currently, the federal government can seize up to 15 percent of the benefits of the Social security of a borrower in the event of default, and the average delinquent borrower has $2,500 deducted from his or her income of Social Security per year, which may decrease your overall quality of life, food, housing, and medical care. “If you find yourself in this situation, don’t panic,” said Michael Ryan, financial expert and founder of michaelryanmoney.com. “You can prevent or stop foreclosure by removing your loans from default status.”
Ryan also encouraged Americans to consider income-based repayment plans, but anticipates that the sequestration of Social Security will be more common in the coming years. “More and more Americans are retiring with student debt,” Ryan said. “The debt relief plan proposed by the Biden administration could help, but it is not a complete solution.”