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Grijalva and Legislators Urge Biden Administration to Cease Withholding Social Security Payments for Repayment of Defaulted Student Loans

Credits: Council on Foreign Relations

Today, Representative Raúl Grijalva, alongside Senators Elizabeth Warren and Ron Wyden, as well as Representatives Ayanna Pressley, Pramila Jayapal, and John Larson, has taken a significant step in advocating for the financial security of vulnerable Americans by calling for an end to the practice of offsetting Social Security benefits to pay off defaulted student loans.

This joint effort comes in response to the devastating impact of offsets under the Treasury Offset Program (TOP) on seniors and people with disabilities who rely solely on Social Security as their primary source of income.

Repayment of Defaulted Student Loans (Credits: Newsweek)

The lawmakers express grave concerns about the disproportionate burden placed on older borrowers, many of whom are already struggling to make ends meet.

According to a 2016 Government Accountability Office report, Social Security offsets to recover defaulted student loan debt have pushed tens of thousands of senior Americans below the poverty line.

The situation is exacerbated by the rising number of older Americans carrying federal student loan debt, with nearly 40 percent of federal borrowers over the age of 65 defaulting on their loans.

Under the TOP, the federal government has the authority to withhold up to 15 percent of monthly Social Security or disability benefits to recoup defaulted student loans.

This punitive measure affects a significant portion of borrowers, with approximately 44 percent of those aged 50 and older subject to the maximum benefit withholding.

The lawmakers highlight the ineffectiveness of these offsets in addressing the underlying issue of outstanding debt. Despite the hardship imposed on beneficiaries, almost a third of borrowers aged 50 and older experienced an increase in their loan balances during extended offset periods.

Additionally, over 70 percent of the repayments collected through Social Security offsets were allocated towards fees and interest, rather than reducing the principal amount owed.

In light of these concerns, the lawmakers urge the Social Security Administration, the Department of the Treasury, and the Department of Education to explore exempting Social Security retirement, survivor, and disability benefits from administrative offset due to student loan debt.

Repayment of Defaulted Student Loans (Credits: The Hill)

This proactive approach seeks to uphold the fundamental principles of economic security and well-being for vulnerable Americans enshrined in the Social Security Act.

Rep. Grijalva, as the primary sponsor of the Protection of Social Security Benefits Restoration Act, has demonstrated his commitment to safeguarding the financial stability of Social Security beneficiaries.

The proposed legislation seeks to restore federal protections of Social Security benefits, preventing the garnishment of these vital benefits for the repayment of non-tax federal debt, including student loans. Additionally, the bill extends protections to other vulnerable groups, such as recipients of railroad retirement and black lung benefits.

The collaborative efforts of these lawmakers underscore the urgent need to address the harmful impact of Social Security offsets on vulnerable Americans and advocate for meaningful reforms to protect their economic well-being.

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