Defaulted Loans May Haunt Seniors

[DJ13]

Monday, March 8, 2010

A little–noticed law could soon result in smaller Social Security checks for hundreds of thousands of the elderly and disabled who owe the U.S. money from defaulted loans and other debts more than a decade old.

Social Security benefits are off–limits to creditors, such as credit–card companies and banks. But the U.S. can collect debts to federal agencies by "offsetting," or withholding Social Security and disability payments.

The Treasury currently withholds benefits of 3.1 million Social Security recipients to recover defaulted student–, farm– and small–business loans, unpaid income taxes, amounts veterans owe for health care, and other debts to the government.

Previously, the U.S. hasn't been able to withhold Social Security payments to recover most debts delinquent for more than ten years.

But a provision in the 2008 Farm Bill lifted the ten–year statute of limitations on the government's ability to withhold Social Security benefits in collecting debts other than student loans—for which the statute of limitations was lifted in 1997—and income taxes, where the limit remains 10 years.......

http://finance.yahoo.com/retirement/article/109011/defaulted-loans-may-haunt-seniors?mod=retire-planning

Do they ever stop going after the most vulnerable?

[WhiteTara]

1. No. the bushies sought out the most

vulnerable to plunder.

[saigon68]

2. And Joe Biden (D) MBNA helped him

By helping pass the bankruptcy reform act in 2005

[WhiteTara]

16. which is why I opposed his presidency and

vice presidency.

[G_j]

3. 2008 Farm Bill ..eh?

how many people knew of this? My guess is basically none.

[DURHAM D]

4. I have a friend who never paid back his student loans from the 60s.

He starts drawing SS this year. I hope they take the money because he did it because he could get away with it. I hope they add interest. He makes a lot of money and should have taken care of the matter years ago.

I can't way until he calls me to complain. He seems to always forget that I don't agree with him on this matter. I paid my loans back and at times it was difficult.

[tabatha]

10. Does he vote Republican?

[inna]

12. It's impossible to avoid paying back student loans (for more than a little while, anyway) if one

is out of school and has a job. They attach your salary/paycheck.

[CoffeeCat]

13. mother of mercy!

If they've been charging him interest and penalties--then he's royally screwed seven ways to Sunday.

I took out 40k in student loans and some of them defaulted while I was in school. It was a huge mess!
I wasn't able to stay in school, because I couldn't obtain more loans, due to the defaults. I quit
and started working and saving money to return to school. The accumulated interest and penalties
added up so quickly. I ended up owing nearly $100k. The debt is now down to $45k. I can't even
imagine how much your friend owes. It has to be in the millions of dollars.

It's possible that he may not owe anything. If they aren't garnishing his wages, then he's likely off
scot free. They didn't tighten up on student loans and defaulters until many years later. Your friend
may be off the hook.

[DURHAM D]

17. He does not receive "wages".

I don't think he is off the hook.

[CoffeeCat]

18. Well then he is royally screwed...

...all of that interest accruing for five decades.

Our national debt and his outstanding balance are probably similar.

:wow:

[virgogal]

14. I'm with you on this one.

[Greyhound]

5. This problem is going to get bigger and bigger...

[reflection]

6. I'm surprised they're even bothering

A Treasury spokesman says the new legislation "allows Treasury's Financial Management Service to collect older debts and levels the playing field so that all eligible debts, regardless of age, are subject to debt collection. Treasury expects this legislation will result in increased collections of $10 million per year in delinquent federal non–tax debt."

10M/yr just isn't that much.

I do see both sides of it, however. It definitely should be reviewed on a case-by-case basis. The aforementioned poster who mentions his friend skipping out on his student loans because he could? I have no problem with a guy like that paying principal and interest. Others, depending on their circumstances, not so much.

[madokie]

7. yes they do

the day you die. Its despicable that the rich can take their tax cuts when its plain for all to see that this is the kind of shit that happens because of the riches tax cuts.
I read that the rich actually use more of the government services than the poor ever do too.

[leftofcool]

8. They can only take 10% and you have to have over 400.00 in SS benefits

[Duer 157099]

9. Which sick fuck thought this up and included it in the bill?

I mean, talk about draining every last drop of blood! You have to be a sick fuck to even think this one up.

[inna]

11. Unbelievable. It gets better and better by a day.

x(

[CoffeeCat]

15. As someone with a motherload of student loans...

I'd like to say that, in some ways, they are preying on students. People who are 18 and 19 don't often
realize the ramifications of taking on that debt. It's more than just that too.

People are forced to take on more loan debt when tuition costs soar and Pell Grants are cut. Why is college
so expensive with very few subsidies? We have to pay so much to get a college education. Our system shouldn't
be so expensive to young adults--requiring them to take on this debt.

Furthermore, there is abuse in the system. I took out loans and there was a paperwork snafu that defaulted
many of my loans. I was held prisoner. I couldn't get more loans which meant I couldn't finish my education.
I dropped out to work three jobs, so I could return. But, I had to pay the loans, to rehabilitate them AND
save for my future tuition. It was crazy, but I did it.

The Director of Financial Aid at my university said that the Loan Servicing Center--the company that serviced
my loans--was notorious for unfairly defaulting students. The loans were "guaranteed" by the government, so
these companies would default you if they thought you might be a risk. Then, they were paid the full amount
of the loan by the government. How convenient for them.

I'm currently paying $1,200 per month on a 100k student loan debt, half of which is penalties and interest.

It's not as simple as people taking out loans. There are other factors pushing on students that leave them
vulnerable. The economy is in the toilet. People need to go to college--yet it's unaffordable with very
little help. I was on the Dean's List and made Mortar Board--and I only qualified for a scholarship that
barely paid for my books. You have to be dirt poor to qualify for Pell Grants.

I believe people should pay their loans off. However, it's not fair that our society underfunds education and
funds unnecessary wars and corporate bailouts. College students are strung up for life--because they want to
work hard and better themselves--but the corporations don't suffer a millisecond when they scream, "But we're
too big too fail!!".

It's not right.