Jayapal, Warren, Wyden, Pressley, Grijalva, Larson, Lawmakers Call on Biden Administration to Stop Withholding Social Security Payments to Pay Defaulted Student Loans
Washington, D.C. – Today, U.S. Representative Pramila Jayapal (D-Wash.), along with Senators Elizabeth Warren (D-Mass.) and Ron Wyden (D-Ore.) and U.S. Representatives Ayanna Pressley (D-Mass.), Raúl Grijalva (D-Ariz.), and John Larson (D-Conn.), led their colleagues in calling on the Social Security Administration (SSA), the U.S. Department of the Treasury (Treasury), and the U.S. Department of Education (ED) to end the practice of offsetting Social Security benefits to pay off defaulted student loans.
Offsets under the Treasury Offset Program (TOP) are a particularly devastating practice for seniors and people with disabilities who rely on Social Security as their sole source of income. In fact, a 2016 Government Accountability Office report requested by former Senator Claire McCaskill and Senator Warren revealed that Social Security offsets to recoup defaulted student loan debt were pushing tens of thousands of senior Americans below the poverty line.
“As a growing number of older Americans have federal student loan debt when they near or enter retirement age, we are concerned that these older borrowers are disproportionately subject to TOP collection,” wrote the lawmakers. “These borrowers who have struggled with their student loan repayment progress could see their wages, tax refunds, and Social Security checks garnished or offset.”
The number of older Americans with student loan debt has been rising steadily. Nearly 40 percent of federal borrowers over the age of 65 have defaulted on their student loans. Under TOP, the federal government can withhold up to 15 percent of monthly Social Security or disability benefits for these defaulted student loans. Roughly 44 percent of borrowers who were 50 years and older at the time of their initial offset were subject to this maximum Social Security benefit withholding.
Additionally, the lawmakers explain that there is little evidence that these offsets are a meaningful solution to collecting outstanding debt. Almost a third of borrowers 50 and older who had offsets lasting five years or longer had their loan balances increase during this time period. And more than 70 percent of the loan repayments collected through Social Security offsets were applied to fees and interest.
“Offsetting Social Security benefits can push beneficiaries closer to—or even into—poverty, undermining the Social Security Act’s mission of providing for ‘the general welfare,’ basic economic security, and the well-being of vulnerable Americans,” the lawmakers wrote. “Accordingly, we urge you to explore exempting Social Security retirement, survivor, and disability benefits from administrative offset due to student loan debt.”
The letter was also signed by Senators Richard Blumenthal (D-Conn.), Laphonza Butler (D-Calif.), Mazie Hirono (D-Hawai’i), Edward J. Markey (D-Mass.), Jeff Merkley (D-Ore.), Alex Padilla (D-Calif.), Bernie Sanders (I-Vt.), Brian Schatz (D-Hawai’i), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), Peter Welch (D-Vt.), and Sheldon Whitehouse (D-R.I.).
In the House, the letter is also signed by Representatives Alma Adams (D-N.C.), Becca Balint (D-Vt.), Jamaal Bowman (D-N.Y.), Cori Bush (D-Mo.), Danny Davis (D-Ill.), Robert Garcia (D-Calif.), Sheila Jackson Lee (D-Tex.), Doris Matsui (D-Calif.), James McGovern (D-Mass.), Jerrold Nadler (D-N.Y.), Alexandria Ocasio-Cortez (D-N.Y.), Bill Pascrell (D-N.J.), Janice Schakowsky (D-Ill.), Grace Napolitano (D-Calif.), and Frederica Wilson (D-Fla.).
Issues: Arts & Education