January 2, 2017 — Just as millions of baby boomers start to enjoy their Social Security retirement or disability checks comes a new worry. The problem arises for the folks who, for whatever reason, did not pay off all of their student loan debts. Many non-payers thought that after the initial wave of debt collection efforts subsided, they were off the hook. Wrong! The government has one last ace to play, and that is garnishment of your Social Security checks.
Last year the Feds reclaimed $171 million in unpaid student loans, and many of those paying it back were over 50 years of age – 114,000 of them in fact. According to a recent Wall Street Journal article the typical delinquent borrower sees their Social Security check reduced by about $140 per month. Some 38,000 of the garnished debtors are 64 years old or more.
What Can You Do If You Are Delinquent?
Chances are that someday you are going to have to pay back your old loans if you are still delinquent, and you plan on collecting Social Security. Probably the best move if you are still working is to take steps to pay them back now while you have the ability to do so. Since almost half of retirees are highly dependent on their Social Security checks to survive, it is not a good move to entire retirement with the prospect of an even smaller benefit. Or, you might want to work more years and delay taking your benefit to Full Retirement Age (66 for most boomers) or even age 70, so you end up with a bigger check. As an alternative, you could try to negotiate a settlement now, although we have no idea if that might work. Or you can just wait and see if the government catches up with you.
Comments? Do you remember the day you paid off your student loans – did you think that day would ever happen? Your editor certainly remembers that day in the early 1980s. If you are behind on your payments, what do you think is the best strategy to take? Please share your thoughts in the Comments section below.