The Student Debt Crisis Is Driving Elderly People Into Poverty

SAUL LOEB via Getty Images WASHINGTON ― Student debt is forcing tens of thousands of elderly Americans into poverty, according to a new Government Accountability Office report. The findings are startling. More than 110,000 senior citizens had their Social Security checks garnished in 2015 to pay off student loans they’d already defaulted on. Nearly 70,000 Americans over the age of 50 are living in poverty as their Social Security benefits are cut to pay off student loan debts. Student lending is typically thought of as a millennial problem ― one of exploding college tuition costs and ruthless interest rates that took hold over the past 20 years. But the GAO report ― requested by Sens. Elizabeth Warren (D-Mass.) and Claire McCaskill (D-Mo.) ― demonstrates that the debt hardship is shared across generations. The elderly student debt nightmare is not going to sort itself out. A full 68 percent of older borrowers living in poverty with Social Security garnishment are only seeing their benefit cuts devoted to interest and fees. Their overall debt burden is not diminishing. They will never stop making payments under the current system without a new source of income. The federal government is profiting from this mess. Every time a debt collector scrapes a Social Security check, the U.S. Department of Education collects $15. “Our government is shoving tens of thousands of seniors and people with disabilities into poverty through garnishment every year ― and charging them $15 every month for the privilege ― just so that the Department of Education can collect a little bit more interest and keep boosting the government’s student loan profits,” Warren said in a written statement provided to reporters. “This is predatory and counterproductive.” The problem is getting worse, not better. Since 2005, the total student debt owed by Americans over the age of 65 has increased nearly fourfold. This is not how either Social Security or private sector lending are supposed to work. Social Security is designed as a basic social insurance program ― you pay in as you work, you cash out when you retire. Functionally, this makes it an anti-poverty program. Old people don’t work, which means they don’t get paid, and so receiving a Social Security check keeps 22 million Americans out of poverty, according the Center on Budget and Policy Priorities, a liberal-leaning think tank. When President Franklin Roosevelt designed the program in the 1930s, he didn’t include a caveat for people with lots of debt. If you paid in, you got the check, and any issues between you and your creditors were your own affair, not the government’s. Lending is not a charitable enterprise. The Salvation Army doesn’t collect interest on bell-ringers in Santa Claus outfits. The financial sector makes a profit from interest rates for shouldering the risk that borrowers might not pay back their loans. Default is a cost of doing business. By allowing lenders to garnish the Social Security checks of people living in poverty, the federal government is encouraging reckless student […]

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