Baby Boomers beware: Feds docking Social Security retirement checks
The U.S. Treasury Department is withholding money from Social Security recipients who have fallen more than 90 days behind on federal student loans. From January through Aug. 6, the government slashed over 115,000 retirees' Social Security checks on the grounds that they had defaulted on federal student loans.
However, the practice of cutting Social Security retirement checks for defaults on any federal obligation is not new. The quickened pace of these recent cuts, though, is breathtaking. It has not quite doubled since just last year. From 2007 to 2011, the enforcement rate grew to about 60,000 cases. In 2000, there were just six such cases.
How much Uncle Sam takes varies, but it can go as high as 15%. The average monthly Social Security retirement check is $1,234. Fifteen percent of that is $190. For those retirees who receive $750 or less per month, no deductions will be made. "This is going to catch an awful lot of people off guard and wreak havoc on their financial lives," says Sheryl Garrett, a financial planner in Eureka Springs, Ark.
The irony here is that a great number of these “defaulted” retirees did not default on their own loans but as co-signers for their children and grandchildren.
Others did take out federal loans own their own behalves as their children matured and left home. These Baby Boomers then went to college or university for the first time or picked up where they’d left off a generation earlier. Still, for reasons as diverse and unexpected as overwhelming health problems (with or without insurance coverage), employment insecurity issues, divorce, bad investments, etc., they ended up on Uncle Sam’s hit list.
Roughly 2.2 million student-loan debtors were 60 years and older during the first quarter of this year. Not quite 10% of their loans were 90 days or more past due (a 6% increase over the first quarter of 2005), according to the Federal Reserve Bank of New York. "It's really a unique problem we haven't had to face before, and it's only going to grow," says Robert Applebaum, founder of Student Debt Crisis, a nonprofit advocacy group in Staten Island, N.Y.
Beginning in 1935, Social Security has remained inviolate, off limits, and untouchable by unscrupulous politicians and greedy Wall Street investors. But just 30 years ago, with the 1980 election of Ronald Reagan to the presidency, the never-ceasing attack against Social Security hit a new and higher gear.
Since Reagan, and with every single successive Republican president, attempts have been made to dismantle, disrupt, and “privatize” this particular federal social program which has exceeded all expectations and has never defaulted or missed a single payment to any beneficiary since 1935. It now has a surplus amounting to trillions of dollars, and is deemed "solvent" for at least another 25 years. Removal of the $106,000 cap (above which earners are not required to pay social security taxes), would ensure the solvency of the program for at least another 100 years.
That is why they want to get their hands on it. Social Security was (until Reagan) always considered the "third rail" of politics. Seniors vote. And they vote against anyone -- Republican/Democrat/whatever -- who even hints at denying them their earned benefits. Social Security is not, and never has been, and "entitlement." That money was earned by working people, who were promised that it would be there when they could no longer work. No. It is not the end-all/be-all for a happy retirement. But, it was taken from our paychecks without our consent, but with our acquiesence. Republicans have literally been salivating for generations over this huge pot of money. They cannot get to it by their usual methods. ISince voters will not allow them to do so through the front door, they have now come through various side doors and the back door itself.
Student loan debt, for example, cannot be discharged in bankruptcy (a Republican Party idea); but now, because of recent and ongoing Republican Party manipulation of the law (including bankruptcy law), any government obligation may be serviced by means of a simple taking of any federal benefit before the beneficiary even sees it – including, annual income tax refunds, and now, amazingly old age pensions, better known as Social Security retirement checks.
When I took out my first government-backed student loan way back in 1966, I did not sign any documents which indicated that should I or my parents default on that loan, any money that the federal government owed me or them -- not gave me -- but owed me, was subject to garnishment, attachment, liens, or whatever legal niceities that Republicans might come up with. And, believe me, we read, and had our family lawyer read the fine print.
Incidentally, and finally, there is -- or was -- a little known loophole in bankruptcy law that allowed certain people to discharge those loans. That loophole has been closed, thanks to some eagle eye Republican Party-affiliated attorneys in Chicago and Dee Cee.
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