Bill would stop feds from dipping into Social Security for student loan payments

By Amy R. Connolly  |  Dec. 11, 2015 at 12:22 PM
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WASHINGTON, Dec. 11 (UPI) -- Senate Democrats introduced a bill to stop the federal government from dipping into Social Security benefits to pay outstanding federal debts, including student loans.

The bill, introduced by Democratic Sens. Ron Wyden of Oregon and Sherrod Brown of Ohio, would clamp down on a law allowing the government to garnish benefits to pay for federal debts that also include Veterans Administration home loans and food stamp overpayments.

"Americans are getting hit by a wrecking ball of increasing college costs, and the last thing they can afford is to have their Social Security benefits reduced to pay off student loans," Wyden, the Senate Finance Committee ranking member, said.

Student loan debt has reached a staggering $1.2 trillion as college costs, including tuition, fees and books, skyrocket. According to the College Board, in-state tuition and fees for one year at a public four-year college education runs on average $9,139. The same education at a private college can cost on average $31,231. The estimates do not include books, housing and dining expenses.

The average student loan borrower leaves college with about $30,000 in debt. Many who are unemployed or underemployed are struggling to meet student loan payments, despite multiple repayment options. About $103 billion in student loan debt is in default.

When Social Security was enacted in 1935, earned benefits were protected from debt recovery efforts. In 1996, the original law was changed to allow the government to garnish the benefits for payment.

In fiscal year 2015, the federal government collected about $382 million from some 860,000 people who had their Social Security benefits garnished due to federal debt. The Government Accountability Office found between 2002 and 2013 the number of people whose Social Security was garnished to pay student debt went from 31,000 to 155,000. For those 65 and older with student loan-related Social Security garnishment, the number went from 6,000 to about 36,000 in the same period.

"Social Security is the bedrock of retirement security and a lifeline for Americans with disabilities," said Brown, the ranking member of the Finance Committee Social Security, Pensions, and Family Policy Subcommittee. "These modest benefits put food on the table, pay for prescriptions, and help with monthly bills. When Americans are crushed by student loan payments, they should be able to count on Social Security benefits. This bill would correct the law to ensure that these earned benefits remain a lifeline instead of a direct deposit on federal debts."

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