Lawmakers Propose Bill to Shield Social Security from Student Loan Defaults
Democratic lawmakers Sen. Bernie Sanders, Sen. Elizabeth Warren, and Sen. Ed Markey have introduced legislation to protect older Americans and borrowers with disabilities from having their Social Security benefits garnished due to federal student loan defaults.
The bill aims to prevent the Treasury Department from withholding up to 15% of defaulted borrowers' Social Security payments, which is currently paused. The lawmakers argue that this measure will provide protection against 'unnecessary forced collections.'
Sanders stated, 'In the richest country in the history of the world, no senior should have their Social Security payments taken away from them to pay back student debt.' He emphasized that seniors are already struggling with skyrocketing costs for healthcare, prescription drugs, groceries, and housing.
The legislation comes as student-loan defaults remain elevated, with over 9 million borrowers in default as of March. The Federal Reserve Bank of New York's data showed student-loan delinquencies at 10.6% in the second quarter, up from 10.3% in the first quarter.
The issue highlights concerns about Social Security funding, which faces a long-term problem due to its main retirement trust fund projected to run out of reserves by the fourth quarter of 2032. Without congressional action, incoming revenue would cover only about 78% of scheduled benefits.