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Bill would end Social Security Administration student loan liens

Federal student loan programs have awesome powers to retrieve unpaid debt. In addition to garnishing tax refunds and wages, the government can also garnish Social Security disability benefits and retirement payments. This remedy has been a serious financial burden for beneficiaries in New Jersey and across the country.

Senators Elizabeth Warren and Bernie Sanders, along with other senators, introduced legislation that would stop the government from garnishing borrowers' retirement and SSD benefits to pay for any student loan defaults. A similar proposal was introduced in 2015, but it was unsuccessful. Many obstacles also stand in the way of this latest proposal.

According to the 1996 law that allows this garnishment, the borrower must keep a minimum $750 in benefits. However, this amount has not increased to account for the rising cost of living in the more than 20 years since that law was enacted.

Approximately 67,300 borrowers over 50 had their benefits garnished below the poverty line in 2015. This was a jump from the 8,300 borrowers reported in 2004. According to a U.S. General Accounting Office report issued last December, the number of borrowers over age 65 who faced garnishment of benefits rose by 540 percent between 2002 and 2015.

This garnishment increase is attributed to several factors. First, there was a significant increase in the number of students going or returning to college. Even more significant, rising higher education costs over the past decades has made older adults to assume more student debt for their own or their children's higher education.

Senator Sherrod Brown also suggested other reforms. These include allowing borrower to refinance their federal loans at lower interest rates, increasing the value of financing the federal government provides to low-income students through its Pell grant program and by making larger investments in community colleges so that they are more affordable to students.

Meeting the eligibility requirements and keeping these benefits may also be challenging for many beneficiaries. An attorney can help complying with federal regulations and keeping these benefits.

Source: MarketWatch, "Senators want the feds to stop plundering Social Security to repay student loans," Jillian Berman, May 1, 2017

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