Thu August 16, 2012
Student Loans Can Dent Retirees' Social Security
Originally published on Fri August 17, 2012 11:37 am
Families often pull together to help finance a college education, with parents and grandparents chipping in or co-signing loans. And now, a SmartMoney report finds the U.S. government withholding money from Social Security recipients who've stopped paying on federal student loans.
And it's an increasingly common event, as AnnaMaria Andriotis, a senior writer at SmartMoney, tells Morning Edition co-host Renee Montagne. Much of the debt stems from federal PLUS loans, taken out by older family members to help students.
On a spike in activity
"In about 12 years, we've gone from just six cases [of Social Security benefits being cut] to 115,000 and counting — because this year isn't even over yet. What we're seeing is that student loan debt is following people later on into life."
On lingering student loans
"This is really the only consumer loan out there that people cannot get rid of. ... In pretty much all of these cases, these are federal student loans that these retirees signed up for, by themselves. There is no co-signer involved."
"Aren't even their own loans"
"In other cases, you have retirees who are still dealing with their own student loan debt — the student loans they incurred to go to college, decades ago. ... But in most cases, these loans aren't even their own loans. And that's what makes this whole situation really sad."
On how much is taken from retirees
"The amount varies, but it can run up to 15 percent of each month's check. So when you look at the average monthly Social Security benefit — that's about $1,200 — that means a monthly haircut of about $190. So, it's not a small amount of money. And especially for a retiree on a fixed income, this sort of situation can really derail their retirement."