As Thanksgiving rolls around this year marking the beginning of the holiday season, we are able to pause and reflect on all that we have to be grateful for. But for far too many of us, this time of the year is no different than any other, with many Americans facing daily struggles and financial hardships. This certainly includes older Americans, too many of whom, despite Social Security, either live in poverty or live one financial shock away from poverty.
Since its establishment under President Roosevelt, the Social Security program has stood for the principle that after a lifetime of work and contributions, older Americans should be able to retire with a secure, guaranteed source of income. More than 80 years later, it remains a vital source of income for over sixty million Americans, allowing them some measure of dignity and independence when work is gone. In Arizona, around 1.25 million beneficiaries receive an average of $15,000 annually in Social Security benefits.
And until 1996, income from Social Security was one of the few sources that people with debt could count on because the benefits were off limits to creditors. Unlike your paycheck, which is subject to garnishment if you are late on a payment, your Social Security benefits were protected from debt collection. But in that year, Congress enacted the Debt Collection Improvement Act. That bill gave our government the power to seize a portion of Social Security benefits for the repayment of student loans, Veterans Administration home loans, food stamp overpayments and the like. It is ironic, at best, that Congress has exempted itself from a rule that limits private creditors. The government garnishing the very income that provides such modest support and lifts so many people out of poverty is plain wrong.
Let’s look at student loans as one example. It is no news that our nation is facing a student loan debt crisis. However, despite popular belief, student debt is not only a young person’s problem. People 65 and older owe billions of dollars on outstanding student loans. As the population ages, the amount owed by older Americans continues to increase.
Some of this debt is decades old, incurred when older Americans sought higher education. Some is the result of co-signing loans to help their children and grandchildren. If the loans can’t be paid off, they will follow you into retirement. Student loans owed by seniors are much more likely to be in default than student debt held by younger Americans. In 2013, 12 percent of federal student loans held by those aged 24 to 49 were in default. In contrast, 27 percent of federal student loans held by those aged 65 to 74 were in default. For those aged 75 and older, the default rate spikes to more than 50 percent!
That’s where Social Security comes into play. If the student loan was made by a private bank or other financial institution, your Social Security benefits are safe. But if the loan was made by the government, a portion of your hard-earned Social Security benefits can be grabbed without your permission.
This garnishment of Social Security benefits is happening and at an alarming rate. The number of retirees and people with disabilities who have had a part of their modest Social Security benefits seized by the government to pay off student loans tripledbetween 2006 and 2013. And this number is projected to grow dramatically in the future, as the cost of education continues to balloon and our population ages.
The good news is that there is a solution – Congress created this problem, which means that it can also fix it. The Protection of Social Security Benefits Restoration Act, which will be introduced in the House of Representatives after Thanksgiving, will overturn the wrong-headed 1996 legislation by restoring the protected status of Social Security trust fund payments. That means no more garnishment of already meager Social Security benefits. Led by Representatives Raúl M. Grijalva, John Larson, Marcia Fudge and Mark Pocan, this legislation is particularly important because in addition to facing a student debt crisis, the nation is facing a looming retirement income crisis. As more and more seniors retire in the future, Social Security will be even more important.
The political impetus is there – polls have repeatedly shown that the American people overwhelmingly support Social Security. But they recognize that benefits are too low. If Speaker Ryan wants to score the legislative “win” that has evaded him thus far, let it be on a bill that actually benefits ordinary Americans rather than taking away their healthcare or rigging the tax code in favor of the wealthy and powerful.
It boils down to the simple fact that our government has a responsibility to pay older Americans their earned Social Security benefits instead of figuring out clever ways to shortchange them. The holidays are a time for happiness with loved ones, but for millions of older Americans they also mean added financial stress.
We urge Speaker Ryan and Republicans to work with Democrats on passing this bill to uphold our government’s most fundamental promise to older Americans. Instead of Americans spending their holidays worrying how they are going to make ends meet, they should be comforted in knowing that the Social Security benefits they have earned are safe and secure.