Did you know that the government can garnish Social Security disability to cover outstanding debt from federal student loans? While this is the situation for anyone receiving Social Security disability benefits, the rule may hit older Americans especially hard. It is estimated that approximately one out of every six people over the age of 50 are carrying some level of student debt. This may be an alarming statistic for Louisiana residents.
A report by Barclays reveals that of the more than $1 trillion owed in student loan debt, Americans over the age of 50 hold 15.5 percent of that figure, and those over the age of 60 hold an additional 4.2 percent.
What is the reason for this statistic? Some people simply had a high volume of student loan debt and are still paying off loans taken out when they were young. Others may have delayed college for personal reasons, and did not obtain their student loans until later in life. Yet, others chose to co-sign loans for children or grandchildren, and now find themselves having to make the payments themselves.
In the end, having a high level of outstanding federal student loan debt can make a big dent in your benefit check. Unlike other forms of debt, most student loans cannot be discharged by a bankruptcy filing unless the borrower can prove they are subject to 'undue hardship.' Meeting that standard is incredibly difficult, as evidenced by statistics from 2008, in which only 29 out of 72,000 bankruptcy filers were able to have their exemption requests granted. Applying for and receiving Social Security disability is a complex and often tedious process, and many savvy applicants turn to professional help to navigate the rules and best leverage their options.
Source: The Huffington Post, "Nearly 16 Percent Of Post 50s Are Carrying Student Loan Debt," Kristen Stenerson, July 13, 2012