By Peter Schroeder - 04/23/15 03:11 PM EDT
A pair of Democratic senators is demanding to know more about the growing number of seniors who are seeing their Social Security benefits slashed to cover student loan debt.
Sens. Claire McCaskillClaire McCaskillOvernight Tech: Obama heads back to Silicon Valley | FCC meeting preview | Yahoo bans terror content | Zuckerberg on sit-in live streams Senator shares frustrating call with cable company Hate TV customer service? So does your senator MORE (D-Mo.) and Elizabeth WarrenElizabeth WarrenBernie fights for relevance Kaine: Nobody should ever say they're ready to be president Al Franken says he would be Clinton's vice president if asked MORE (D-Mass.) sent a letter to the head of the Government Accountability Office (GAO) Thursday, calling for a study on this growing segment of senior Americans. The percentage of households headed by people aged 65 to 74 with student loan debt quadrupled from 2004 to 2010.
“Garnishing Social Security benefits defeats the entire point of the program — that’s why we don’t allow banks or credit card companies to do it,” said McCaskill, the top Democrat on the Senate Special Committee on Aging, in a statement. “Social Security is the sole means of retirement income for tens of millions of Americans, and allowing those benefits to be garnished to collect student loan debt cuts a dangerous hole in our safety net.”
In 2014, the government withheld $161 million in Social Security payments to cover student loan debt that had fallen into default. With overall student loan debt now standing at more than $1.2 trillion, the senators cautioned that older Americans looking to head back to school to learn new skills could see their critical lifeline endangered if they cannot pay back their loans.
A September study by the GAO on the issue found that from 2002 to 2013, the number of Americans who had their Social Security benefits cut to cover student loan debt increased fivefold.
The study also noted that older Americans taking on student loans are likelier to already be carrying other types of debt, such as a mortgage or credit card debt. And data indicate that older borrowers are more likely to default on student loans than younger ones.
Specifically, the senators want the GAO to examine how the incomes of older Americans is affected if they see their benefits cut due to student loan debt, and how accumulating student loan debt affects people preparing for retirement. Furthermore, they want to know whether garnished benefits are used to pay down the principle of the debt owed or instead for interest and fees.