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Think You Got Away with Not Paying Your Student Loans – Think Again

Category: Financial and taxes in retirement

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.

Posted by Admin on January 1st, 2017


  1. As I understand if you earn less than $700 monthly from SS they do not garnish you because you are low income.

    by areti11 — January 2, 2017

  2. Update… seems the first $750 is off limits according to the IRS.

    by areti11 — January 2, 2017

  3. I returned to school when I was in my 50s and remember joking with one of my professors that I’ll be using my SS to pay off my student loans. Not too far from the truth…

    by Fionna — January 2, 2017

  4. My student loan was the first debt I paid in full. It was such a wonderful feeling not to have to make that payment each month that I followed suite with the debt on my business and house.

    Debt free is the way to be!

    by Gary — January 2, 2017

  5. Why doesn’t the government garnish wages when the college student graduates and starts working? If loan payback is a problem, why wait 40+ years to take action? Not to mention at $140 a month being garnished, the loans may never be fully repaid. If not garnished from paycheck, the money could be paid when filing income taxes.

    by Louise — January 2, 2017

  6. The administration of students loans now is totally different than when I used them years ago. Unless graduates come out with super jobs they can be almost impossible to pay off quickly as the interest now accrues at an alarming rate. It is one of the biggest reasons for the sluggish economy as young people put off major purchases in order to pay down their loans.

    by Staci — January 3, 2017

  7. Well, it’s about time. I can’t count the number of people I’ve met who actually brag about their ‘free; education and even claim they never intended to pay them back because, “nobody does”. I wish the govt would be more aggressive in getting taxpayer money back from student loan defaulters. Nothing more than thieves.

    by DLH0 — January 4, 2017

  8. I have a student loan and have been paying it back for years. I’ll go into retirement with it and will continue to pay. I spoke with someone about it recently, and if I make less than $25,000 a year, my monthly payment will be about $95 a month. I am not in arears, so I don’t know if that makes a difference or not. I am grateful that the government helped me. My job has been in a helping profession (librarian at a tribal college), so not big bucks, but still a decent salary. I know I helped a lot of people get their own college education. I have no problem paying back my student loan, and it is worked into my retirement budget at around $100 per month.

    by Elaine C. — January 4, 2017

  9. Staci
    I would love to know how you managed that. On my sons student loan of $5,000 (no longer administered by the government but by a private organization) the payment is $165.00 monthly and he just graduated from school.

    by Staci — January 5, 2017

  10. Sorry to Elaine

    by Staci — January 5, 2017

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