Government Docks SS Checks for Student Loan Payment, Office for the Aging Assists Seniors

The federal government has begun docking the Social Security checks of seniors who owe on their student loans. One case that is particularly said is that of Naomia Davis whose family turned to The Legal Aid Society’s Brooklyn Office for the Aging to get help.

Ms. Davis, who is 80, suffers from Alzheimer. She took out a student loan in the 1980s to pay for cosmetology school. The government takes $140 of the $822 Social Security check every month. Legal Aid lawyers have been fighting for Ms. Davis for the past year.

When your Social Security check disappears because of an old student loan
By Jillian Berman
June 25, 2015

Naomia Davis hasn’t been able to talk on the phone since 2004. The 80-year-old Brooklynite was diagnosed with Alzheimer’s more than 10 years ago and can no longer read.

Despite all of this, the government still expects her to pay back a federal student loan she took out in the 1980s to attend cosmetology school. And so every month, $140 of the $822 Davis gets in Social Security—her only income, except for Medicaid—is garnished by the government and put toward paying back her debt.

“How can you take money from someone who is not in her right mind?” asked Monica Arroyo-Horne, Davis’s 55-year-old daughter, who now legally controls her mother’s finances. “It’s horrible, I feel bad for her. I sit here and often wonder what if I wasn’t here in her life.”

After sending letters to government agencies and local council members in an effort to stop the government from garnishing her mother’s benefits, Arroyo-Horne turned to lawyers at the Brooklyn Office of the Aging, a division of New York City’s Legal Aid Society to try and get the Department of Education to forgive the loan. The application has been pending since late last year and they’re still waiting to hear back.

Davis’s story isn’t unique. In 2013, the government garnished about $150 million in Social Security benefits from Americans to pay back their student loans, according to a September analysis from the Government Accountability Office. Between 2002 and 2013, the number of senior citizens losing out on a portion of their Social Security to pay back education debt soared 500% from 6,000 to 36,000.

That number is only expected to grow as generations of Americans who were more likely to take on loans for their own schooling or to pay for their kids’ education retire. More than 3 million Americans ages 50 to 64 are in default on their student loans, putting them at risk of having their benefits garnished when they claim Social Security, if they don’t find a way to become current on their debt. When students take on loans through the federal government instead of through private lenders they have access to protections such as the ability to pay according to their income or defer payment on their loans if they become unemployed. But the federal government also has powers, not available to private lenders, to collect on those loans if borrowers default instead of finding a way to pay them back, such as garnishing portions of borrowers’ tax refunds and Social Security checks.

“The number of Americans in or near retirement with student loan debt is increasing dramatically,” Senator Claire McCaskill, a Democrat from Missouri who requested more information from the GAO on seniors experiencing garnishment earlier this year, wrote in a statement to MarketWatch. “This means the number of Americans having their Social Security garnished to recoup student loans could also rise, potentially cutting a dangerous hole in the safety net of hundreds of thousands of retired Americans—many of whom depend on Social Security to keep them out of poverty.”

When a borrower is delinquent on her student loan for at least 425 days, the Department of Education has the authority to initiate the process of administrative offset. Through this mechanism, the Treasury Department withholds portions of a borrower’s tax refund or Social Security benefits and puts it toward paying off the loan. There are reasons borrowers in default may be exempt from administrative offset, like if their debt falls below a given threshold or if their monthly Social Security check is relatively small.