A group of Democratic lawmakers is pushing to eliminate a punitive measure faced by some student-loan borrowers who fall behind on payments.
Urging Biden Administration Action
Sens. Elizabeth Warren and Ron Wyden, along with Reps. Ayanna Pressley, Pramila Jayapal, Raúl Grijalva, and John Larson, led a group of 27 colleagues in urging President Joe Biden’s administration to cease withholding Social Security benefits for defaulted borrowers.
The Treasury Offset Program
In a letter addressed to Social Security Administration Commissioner Martin O’Malley, Treasury Secretary Janet Yellen, and Education Secretary Miguel Cardona, the lawmakers referenced the Treasury Offset Program. This program allows the government to withhold a portion of a borrower’s Social Security benefits to offset defaulted student loans.
Impact on Vulnerable Groups
The lawmakers described this practice as “particularly devastating” for seniors and individuals with disabilities who rely on Social Security as their primary source of income. They highlighted concerns about the effectiveness of this measure in collecting outstanding debt, citing evidence that offsets often fail to reduce loan balances significantly.
Financial Strain on Older Borrowers
An analysis by the think tank New America revealed that 3.5 million Americans aged 60 and over collectively hold approximately $125 billion in student loans. Many of these borrowers depend on Social Security as supplementary income, making it challenging for them to repay their loans later in life.
Implications for Poverty Levels
The lawmakers emphasized the potential impact on poverty rates among older Americans, citing a report by Sen. Bernie Sanders that found 38% of individuals over 65 would be in poverty without Social Security income. Withholding benefits could exacerbate financial insecurity among vulnerable populations.
Biden Administration Response
While the Biden administration has yet to comment on the matter, the lawmakers urged officials to consider exempting Social Security retirement, survivor, and disability benefits from administrative offset due to student loan debt. They argued that offsetting benefits contradicts the mission of Social Security to ensure economic security for all Americans.
As discussions continue, the fate of this practice and its implications for older borrowers remains uncertain.
Jade Simon
