Wednesday, August 8, 2012

Grandma's New Financial Problem: College Debt


Tens of thousands of retirees have fallen behind on student loans--and the feds are coming after their Social Security benefits.
SMART MONEY
By AnnaMaria Andriotis 
August 7, 2012


It's no secret that falling behind on student loan payments can squash a borrower's hopes of building savings, buying a home or even finding work. Now, thousands of retirees are learning that defaulting on student-debt can threaten something that used to be untouchable: their Social Security benefits.

According to government data, compiled by the Treasury Department at the request of SmartMoney.com, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees' Social Security checks on those grounds. That's nearly double the pace of the department's enforcement in 2011; it's up from around 60,000 cases in all of 2007 and just 6 cases in 2000.

MORE: Grandma's New Financial Problem College Debt