If you don’t make timely payments on your student loans, your Social Security benefits may be reduced.
After student loan payments start to be collected again, the Center for Retirement Research at Boston College estimates that the average annual loss in Social Security benefits will be roughly $2,000.
Social Security Benefits
It often amounts to 4% to 6% of household income, which is enough to pay off the credit card bill of the ordinary person.
Less than 5% of recipients are now in debt due to college loans. The study also mentioned that increased delinquency rates are anticipated for future beneficiaries.
According to Siyan Liu, a research economist at the Center for Retirement Research, the amount of student loans held by younger people is significantly higher. Future beneficiaries may not receive benefits if they are unable to make payments, according to Liu, if this trend continues until retirement.
When Social Security withholds 15% of the entire payout for student loan debtors, it creates a significant problem for people living on a fixed income, according to Boston-based student loan law expert Adam Minsky.
According to researchers, the 15% withholding from paychecks, or $750 monthly, causes people to live below the poverty line.
As per Diane Standaert, executive vice president and head of state policy at the Center for Responsible Lending, many consumers are not aware of their alternatives for preventing the seizure of their benefits. As per Diane Standaert, executive vice president and head of state policy at the Center for Responsible Lending, many consumers are not aware of their alternatives for preventing the seizure of their benefits.
Instead of going via the Social Security Administration, student loan borrowers can appeal to the Department of Education.
Before choosing the default form of payment, you can pay your student loan installments by getting in touch with your loan servicer. The Request to Stop or Reduce Offset of Social Security Benefits form is also available to borrowers of student loans.
The Department of Education reported that as of September, almost 2.7 million borrowers aged 62 and older owed more than $107.3 billion in federal loans.
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Student Loan Forgiveness
A student loan forgiveness scheme was unveiled by US President Joe Biden, promising to relieve millions of borrowers’ debt by up to $20,000. The conclusion is currently in limbo, though, as legal disputes are being heard in court.
In February, the Supreme Court will hear arguments in two cases involving the forgiveness program. By June, a decision is anticipated.
Before the program was abolished on November 10 by a federal district judge, over 26 million people submitted applications. On October 17, the program’s official application period opened.
Up to $10,000 of a borrower’s student loan may be forgiven if they make less than $125,000 annually as an individual, less than $250,000 annually as a married couple, or as the head of a household.
If a qualifying borrower additionally obtained a federal Pell grant while enrolled in college, they may also be eligible for debt forgiveness of up to $20,000.
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