Data and Research

Student Loan Debt Following Some into Retirement

By Rebecca Moore | December 21, 2016
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About 44% of borrowers 50 and older at the time of their initial offset saw the maximum possible amount of their Social Security benefit withheld, equal to 15% of their benefit payment. The offset for the remaining 56% was less than the maximum 15% of their benefit payment. Most of these borrowers had between 10% and 15% of their benefit payment offset.

Older borrowers who remain in offset may increasingly experience financial hardship. Such is the case for a growing number of older borrowers whose Social Security benefits have fallen below the poverty guideline because the offset threshold is not adjusted for increases in costs of living. In fiscal year 2004, about 8,300 borrowers in the 50 and older age category had benefits below the poverty guideline compared to almost 67,300 in fiscal year 2015. As a share of borrowers in the 50 and older age category, this growth was equivalent to an increase from 38% in fiscal year 2004 to 64% in fiscal year 2015. In addition, a growing number of these older borrowers already received Social Security benefits below the poverty guideline before offsets further reduced their income.

The GAO noted that nearly one-third of older borrowers were able to pay off their loans or cancel their debt by obtaining relief through a process known as a total and permanent disability (TPD) discharge, which is available to borrowers with a disability that is not expected to improve.

The GAO suggests that Congress consider adjusting Social Security offset provisions to reflect the increased cost of living. It is also making five recommendations to Education, including that it clarify documentation requirements for permitted relief resulting from disability. Education generally agreed with GAO's recommendations.

The GAO report may be downloaded from here.