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According to a report from the non-partisan Government Accountability Office (GAO)released on 19 December 2016, stated that 114,000 people in that age group had their benefits garnished during fiscal year 2015, a process the GAO calls an offset. That figure represents an increase of 540 percent compared to fiscal year 2004.

The agency’s acting director of education and workforce security, Allison Bawden, told us that the garnishment was applied to users who have defaulted on their loans and are drawing at least $750 per month in Social Security benefits. The offset can take up to 15 percent of these users’ monthly payments, and the median amount deducted in an offset, she said, was $140 a month.

The GAO report also stated that between fiscal years 2002 and 2015, the number of people between ages 50 and 65 subject to offsets increased by 540 percent.

Around 32 percent of seniors 50 and over “paid off” their loans or were allowed by the Education Department to discharge them due to disability, the report said. But another 13 percent died with their loans still outstanding.

The report was conducted at the request of two Democratic lawmakers, Sen. Claire McCaskill of Missouri and Sen. Elizabeth Warren of Massachusetts. Warren called the practice of Social Security garnishments “predatory and counterproductive” in a statement released on 20 December 2016

Impact of Offsets on Older Borrowers' Social Security Benefits 

Since Social Security is the primary source of income for many older Americans, GAO was asked to review these withholdings, known as offsets.

GAO’s Recommendations

Congress should consider modifying Social Security administrative offset provisions, such as by authorizing the Department of the Treasury to annually index the amount of Social Security benefits exempted from administrative offset to reflect changes in the cost of living over time.

The Secretary of Education should inform affected borrowers of the suspension of offset and potential consequences if the borrower does not take action to apply for a TPD discharge. Such information could include notification that interest continues to accrue and that offsets may resume once their disability benefits are converted to retirement benefits.

The Secretary of Education should revise forms sent to borrowers already approved for a TPD discharge to clearly and prominently state that failure to provide annual income verification documentation during the 3-year monitoring period will result in loan reinstatement

The Secretary of Education should evaluate the feasibility and benefits of implementing an automated income verification process, including determining whether the agency has the necessary legal authority to implement such a process.

The Secretary of Education should inform borrowers about the financial hardship exemption option and application process on the agency’s website, as well as the notice of offset sent to borrowers

The Secretary of Education should implement an annual review process to ensure that only eligible borrowers are exempted from offset for financial hardship on an ongoing basis


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