topic Re: Social Security garnishments spark alarm [student loans] in Credit in the News

Social Security garnishments spark alarm [student loans]

Gollum — Sun, 08 Jun 2025 01:32:33 GMT

"Hundreds of thousands of Social Security recipients were jolted recently by notices warning that their benefits would be reduced starting in June. The reason? Delinquent federal student loans. However, in a last-minute reversal, the Trump administration announced a pause on the garnishment of Social Security checks for borrowers in default."

https://www.thenewstribune.com/news/business/article308107555.html#storylink=partnerdigest_the (June 07, 2025)

Re: Social Security garnishments spark alarm [student loans]

Thomas_Thumb — Sun, 08 Jun 2025 21:30:37 GMT

Another government perversion. Take money from those on fixed income that need the benefit to cover living expenses.

Note: I understand the first $750 in monthly SSB is exempted from the 15% garnishment. A majority of SS beneficiaries rely on their full benefit amount to make ends meet.

The government should focus on garnishing wages from the employed with loan balances and clawing back forgiven loans from the employed as well. That includes working people who had student loans discharged as a result of bankruptcy.

Dividend and capital gains income should be subject to withholding/garnishment for student loan repayments. Force payback during working years.

Extracting payments from the retired destitute is foolishness. It just places undue burden on society. Why did government not extract payments during the prior 30 years?

Of course the retired with loans and ample income sources outside SS should have their benefits garnished. Perhaps up to 50% - imo.

Re: Social Security garnishments spark alarm [student loans]

Zoostation1 — Mon, 09 Jun 2025 03:45:45 GMT

@Thomas_Thumb - Are there that many people with student loans discharged in bankruptcy? I thought that since the 2005 changes it's been almost impossible to discharge a student loan in a BK.

Re: Social Security garnishments spark alarm [student loans]

Thomas_Thumb — Mon, 09 Jun 2025 04:53:23 GMT

2005 is only 20 years ago. Those filing bk at age 30 to 40 in the 10 years prior to 2005 might have seen loans discharged - yes? That would be a prime age group for filing and one that is approaching/entering retirement.

Re: Social Security garnishments spark alarm [student loans]

Realist — Thu, 12 Jun 2025 04:26:39 GMT

There's a little bit of irony in this situation. They club you over the head and steal your social security contribution, and in the case of non-payment, claw back a portion that they intend to give back to you through devalued dollars in the future, if you have unpaid loans. That seems a bit criminal - squared.

We personally never do business with the gov for student loans. It has it's own circus of nonsense to deal with. Going private, will be a tad more expensive, but it eliminates much of the nonsense. The difference for us was nearly negligable in rate or payment at the time.

Worse case scenario, discharging federal student loans are near impossible, or at least use to be. Private student loans, not so much. Sometimes it's better to pay a little more, to provide options in a SHTF scenario. Always have a built in "oh crap" handle, should everything for some reason fall apart. That "oh crap" handle, doesn't involve federal loans.

Re: Social Security garnishments spark alarm [student loans]

FicoMike0 — Fri, 20 Jun 2025 21:22:56 GMT

Personally, I think the gov should get out of the student loan business.

This story brings the vision of old folks as victims. The last time I went to a ssa office, the majority there appeared under 40. I'd bet the majority of those affected are younger, collecting disability.

I know, college tuition is a lot higher than when I graduated. I know very well, I paid for three children to go.

I just paid my property taxes, im not very sympathetic.

Re: Social Security garnishments spark alarm [student loans]

AndrewF — Fri, 01 Aug 2025 02:43:45 GMT

@Realist wrote:
There's a little bit of irony in this situation. They club you over the head and steal your social security contribution, and in the case of non-payment, claw back a portion that they intend to give back to you through devalued dollars in the future, if you have unpaid loans. That seems a bit criminal - squared.

We personally never do business with the gov for student loans. It has it's own circus of nonsense to deal with. Going private, will be a tad more expensive, but it eliminates much of the nonsense. The difference for us was nearly negligable in rate or payment at the time.

Worse case scenario, discharging federal student loans are near impossible, or at least use to be. Private student loans, not so much. Sometimes it's better to pay a little more, to provide options in a SHTF scenario. Always have a built in "oh crap" handle, should everything for some reason fall apart. That "oh crap" handle, doesn't involve federal loans.

Social Security taxes are highly regressive, but the benefits are very progressive. The less you made, the higher the percentage of that income you make back.

You also don't have to work your entire adult life to get full retirement benefits. You only have to work 35 years for all your "top 35 years" to be penciled into the Primary Insurance Amount (PIA).

My spouse was an immigrant who is now a citizen. He's been working for 5 years and a few months, full time. It's interesting to see his Social Security statements every year, because while it wouldn't be much based on how much he's worked now, it's also not nothing. Even if there was no more work record until he reached FRA, he would still get over $850 for life. They take your highest 35 years. If you haven't worked for 35 years, they take the years you didn't work and average those in as a $0 year.

Overall, you're not going to get a better deal than that, especially when you consider that if I die before my spouse, then my spouse can draw based on my earnings record if it was higher, and get a bump-up.

This formula is designed so that widows and widowers won't become absolutely destitute after their spouse passes.

Term life insurance would be a good decision to make sure that you don't leave your spouse in a predicament where your passing would leave them unable to pay the bills, though.

Most people get more out of Social Security than they ever paid into it, especially when you consider Medicare. My father has had so many health problems that Medicare alone has paid out more than he ever paid in taxes and premiums. In just the past two years, it paid for two major surgeries. Overall, most people are getting a good deal from this program. They're getting more than they paid.

What's not getting a good deal is the Social Security Trust Fund, which is a captive investor in intragovernmental debt, but that's another story.

Now, the people getting student loan garnishments taken out of their Social Security checks are unfortunately finding out that while most creditors cannot garnish Social Security money, the government can. And those Parent Plus loans their kids convinced them to co-sign were a mistake.

Co-signing for a loan of any kind is a mistake. It means when they stop paying for it, you start paying for it, be it a student loan, or their car.

And even when it's just a car, who wants to be stuck paying on a car someone else has no incentive to turn back over to them? Banks love to lend money. It's their favorite thing to do. When they say you need a co-signer, it's because the bank's not stupid and they know that your co-signer will pay the loan because you probably won't.

Even if your children want to pay their Plus loans, they may not be able to do it. The interest rate on these things is very high, almost like taking out a personal loan. I think people should have had some talks with their children saying "I love you, but you're going to have to figure out college."

Re: Social Security garnishments spark alarm [student loans]

coldfusion — Fri, 01 Aug 2025 11:49:50 GMT

@AndrewF wrote:
My spouse was an immigrant who is now a citizen. He's been working for 5 years and a few months, full time. It's interesting to see his Social Security statements every year, because while it wouldn't be much based on how much he's worked now, it's also not nothing. Even if there was no more work record until he reached FRA, he would still get over $850 for life. They take your highest 35 years. If you haven't worked for 35 years, they take the years you didn't work and average those in as a $0 year.

He isn't eligible for retirement benefits until he has obtained 40 credits, until the he's only eligible for spousal benefits or SSI. He should be earning a Social Security credit for every roughly $1750 (current rate) in earned income in each year, but you can only earn up to 4 credits per year. If your timeline is accurate barring any targeted loophole like having a job that doesn't partipate in SS your husband would potentially be eligible for retirement benefits at some point in 2029, but not before.

That's the actual requirement behind the 'you need to work at least 10 years to collect Social Security' type arguments.

Re: Social Security garnishments spark alarm [student loans]

AndrewF — Sat, 02 Aug 2025 02:52:52 GMT

@coldfusion wrote:
@AndrewF wrote:
My spouse was an immigrant who is now a citizen. He's been working for 5 years and a few months, full time. It's interesting to see his Social Security statements every year, because while it wouldn't be much based on how much he's worked now, it's also not nothing. Even if there was no more work record until he reached FRA, he would still get over $850 for life. They take your highest 35 years. If you haven't worked for 35 years, they take the years you didn't work and average those in as a $0 year.

He isn't eligible for retirement benefits until he has obtained 40 credits, until the he's only eligible for spousal benefits or SSI. He should be earning a Social Security credit for every roughly $1750 (current rate) in earned income in each year, but you can only earn up to 4 credits per year. If your timeline is accurate barring any targeted loophole like having a job that doesn't partipate in SS your husband would potentially be eligible for retirement benefits at some point in 2029, but not before.

That's the actual requirement behind the 'you need to work at least 10 years to collect Social Security' type arguments.

Yes, which would be less than 5 years from now. But he's also not old enough to even file at all for another 22 years, so would have worked at least 32 (ish) out of the 35 years as far as "35 highest years of earnings" even if he decided to take benefits aged 62.

So they would penalize for early claim and three years of $0 in the 35 year calculation for PIA.

To take at 65, there'd be the entire 35 years for PIA, but still a penalty for taking benefits early.

There's always an option to draw benefits at 62, and actuarially it should be the same as if you take them at any other age as far as lifetime amount collected, but for most people it comes down to can they live on the smaller checks if they take them early and how long do they think they'll live. Obviously some people don't live as long.

I had a landlord that took them at 62. I asked him why. He said he had multiple chronic life-threatening health problems that I won't get into, but nobody really knows how long they'll live. And, amazingly he's still alive all these years later, but that was not a given, and you can't leave the money to anyone when you go because it's not specifically set aside for you.

There's definitely an argument for taking them early in our case. It doesn't take as much money to live where he's from and due to our marriage I have the right to legal permanent residency there. So at the rate things are heading with the affordability crisis in the United States, that's one potential "foot out the door" option. No more hedge fund landlords. No more financialization of health care.

Was talking to a friend the other day, in the UK, who wryly noted that "Hospitals in the US are glorified debt collectors."

I had no strong argument against this. I've got shoulder surgery coming up and have reconciled with the idea of a prolonged recovery, but what the bill will be is anyone's guess. Sort of tired of this.

Also, my spouse is eligible for SSDI because the Social Security website said he would be, presuming that he became disabled right now and made a claim and it was approved. It would only be about $893 a month, but he has enough credits for that.

He's not disabled, that's just hypothetical, and I'd hate to figure out a budget based on $893 on his side, but $893 beats a kick in the butt. It goes up every year when I check since they were even giving the figure before it said "You have enough work credits."

Going back to retirement, you become eligible to file a claim at 62, with the aforementioned penalty, but the amount your check would be goes up every month you don't file until age 70.

My dad delayed until 70, of course he may not get as much as if he took it at 62, thanks to the fact that he's had two emergency surgeries, including one because his heart is clogged and he went down last year while mowing the lawn.

Then he went out and mowed the lawn again this year, and he went flying down a hill and into the neighbor's fence, and broke his hand.

I told him pay someone to mow the lawn. He has the money.

Circling back to my spouse, yes, Social Security credits affect immigrants in yet another way, the US citizen is responsible for them financially until they've paid 40 credits into Social Security -or- until they become a US citizen, whichever happens first.

Since the INA allows spouses of US citizens to apply for citizenship 3 years after the date their Conditional Green Card (the 2 year one for which conditions must be removed via I-751 Removal of Conditions), you can become a US citizen in perhaps 4-5 years after you start the process of a marriage based green card. You can even hit USCIS with a "combined filing" so they adjudicate both cases at once.

So when my spouse became a US citizen in 5 years, I was released from the I-864 Affidavit of Support at that point, not at the point he would earn 40 credits for Social Security. I also no longer have to fill out form I-865 every time we move.

Someone called Dave Ramsey a while back asking if they should sign a joint sponsor form for their son-in-law and I was like (to myself) "Well, only if you're absolutely sure that he's not going to divorce the daughter, run off, and sign up for government programs, otherwise have fun with your retirement while they're docking your Social Security and putting liens on your property."

In general, if you have someone ask you to sign as a joint sponsor for immigration, you should be even more afraid (especially now) than you would with co-signing a car loan, or even a Parent Plus! school loan. While they might not come calling on you, they also might. And you could have to refund the government for Medicaid, food stamps, all kinds of stuff, from some person who divorced your adult child who was probably the one begging you to sign.

In situations where filing bankruptcy wouldn't help you at all and they'll get to dock your Social Security checks, don't sign those forms, ever.

Re: Social Security garnishments spark alarm [student loans]

CreditCrusader — Wed, 20 Aug 2025 00:41:52 GMT

@Thomas_Thumb wrote:
clawing back forgiven loans from the employed as well.

Yeah...they can't do that if the loans were PSLF forgiven or otherwise forgiven as a matter of law.

Re: Social Security garnishments spark alarm [student loans]

Realist — Wed, 20 Aug 2025 13:02:29 GMT

They offer a social security calculator that can help to determine your anticipated payout, both in real time or future inflationary dollars, depending upon the year you wish to retire. It's a very crude method to determine what you will likely receive, and it does take in account of your last 30-35 years of earnings, or your future anticipated earnings - to determine a result.

The part that most people fail to consider, is the part where social security may become watered down, renegotiated, reworked, to adjust budgeting based upon the stolen dollars over decades, versus the future incomes and less potentual population to be. If you work in a healthy adjustment, it does help with future preparations and planning. Knowing is half the battle.

If you are riding out and hoping that social security is going to carry you through your senior years, then you are asking to live a life of poverty until you perish. It's a last line of defense that never should be weighted as the only mechanism to retire upon.

Re: Social Security garnishments spark alarm [student loans]

crystal626 — Thu, 21 Aug 2025 01:57:37 GMT

@Realist wrote:
They offer a social security calculator that can help to determine your anticipated payout, both in real time or future inflationary dollars, depending upon the year you wish to retire. It's a very crude method to determine what you will likely receive, and it does take in account of your last 30-35 years of earnings, or your future anticipated earnings - to determine a result.

The part that most people fail to consider, is the part where social security may become watered down, renegotiated, reworked, to adjust budgeting based upon the stolen dollars over decades, versus the future incomes and less potentual population to be. If you work in a healthy adjustment, it does help with future preparations and planning. Knowing is half the battle.

If you are riding out and hoping that social security is going to carry you through your senior years, then you are asking to live a life of poverty until you perish. It's a last line of defense that never should be weighted as the only mechanism to retire upon.

Not everyone has a choice. For many people, it's Social Security or nothing, because they don't have any money they can direct to anywhere else.

Re: Social Security garnishments spark alarm [student loans]

Realist — Thu, 21 Aug 2025 12:45:22 GMT

I can understand thinking that, and perhaps that's true for a small few, but most everyone had always had a choice leading up to that final situation. The choice limited to, are the lack of options made available, created from those opportunities one fails to participate in when times were good in life.

Fail to plan or plan to fail.

Re: Social Security garnishments spark alarm [student loans]

crystal626 — Thu, 21 Aug 2025 18:36:58 GMT

@Realist wrote:
I can understand thinking that, and perhaps that's true for a small few, but most everyone had always had a choice leading up to that final situation. The choice limited to, are the lack of options made available, created from those opportunities one fails to participate in when times were good in life.

Fail to plan or plan to fail.

It must be nice to live in your reality where poverty is a choice.

Re: Social Security garnishments spark alarm [student loans]

AndrewF — Fri, 22 Aug 2025 03:05:05 GMT

@Realist wrote:
They offer a social security calculator that can help to determine your anticipated payout, both in real time or future inflationary dollars, depending upon the year you wish to retire. It's a very crude method to determine what you will likely receive, and it does take in account of your last 30-35 years of earnings, or your future anticipated earnings - to determine a result.

The part that most people fail to consider, is the part where social security may become watered down, renegotiated, reworked, to adjust budgeting based upon the stolen dollars over decades, versus the future incomes and less potentual population to be. If you work in a healthy adjustment, it does help with future preparations and planning. Knowing is half the battle.

If you are riding out and hoping that social security is going to carry you through your senior years, then you are asking to live a life of poverty until you perish. It's a last line of defense that never should be weighted as the only mechanism to retire upon.

Absolutely. I hired some movers today and gave them a generous tip, each, and said, "You should put that in a nice retirement account, diversified, and don't touch it. If you pile everything in there and plow through the ups and downs of the markets for forty or fifty years, you'll be millionaires."

The implication of working with your back means that when your back goes out, you have no more work. So these are the people who need to save like there's no tomorrow and sacrifice whatever they have to now.

Re: Social Security garnishments spark alarm [student loans]

Realist — Fri, 22 Aug 2025 12:20:19 GMT

The harder one works, the luckier one gets.

Re: Social Security garnishments spark alarm [student loans]

AndrewF — Sat, 23 Aug 2025 04:56:04 GMT

@Realist wrote:

The harder one works, the luckier one gets.

Yeah, we just moved out on a landlord that was like the Boss Battle of stupid landlords.

His business partner is facing 70 years in prison on dozens of fraud and money laundering charges, the landlord is letting the building fall over into the street.

High interest rates and over leveraging has led to a situation where all of his investments are underwater and he's running out of "investors".

We went back to our last landlord who earned his money by viewing his properties as a long term investment. Paying off the mortgages and using rental income to buy other properties to rehab outright.

He fixes things and responds to you almost immediately.

I'll bet his jaw dropped when he went to unload his worst property, which is what we moved from, and some moron came and didn't even inspect it and offered over three hundred percent of fair value.

The slumlord who took it over had to effect 17 evictions in the past two years. He has a habit of not screening people. Then by the time he gets rid of them they have seven or eight months unpaid rent plus it cost him $2000 to get them out.

He brags on his website that he "operationalized" a storage closet as an apartment. He took a broom closet and turned it into a studio. The pipe collapsed and the shower backed up. He couldn't rent it until he fixed that, so it cost him digging up the hallway to repair a pipe.

Then when he found a tenant, the guy left owing $8000 rent and a $2000 eviction.

One bad tenant can destroy the profit generated by ten good ones for a year if you don't screen carefully and get them to eviction court immediately if they don't pay.

"Operationalized"

Then his negligence including insufficient garbage collection, not repairing a leaky roof that pools rain water in the basement hallways, and not fixing busted windows and just letting people live there anyway for months led to a cockroach infestation.

Everyone but us had a severe infestation and that's only because I took immediate action to create barriers of boric acid and indoor bug poison spray and poison baits and everything I could think of until we could get out. Everyone else just had them crawling all over them.

But last year, nobody's toilets worked for 11 days because a pump broke and he refused to fix it and went on vacation in India, and then when I reported him to the city he fixed it to avoid $750 daily fines.

He's pretending to be rich. He's effectively running a Ponzi scheme. Absolutely nothing about this guy is real.

He avoided hard work and said on his website that some guy in a coffee shop in 2008 said "Let me teach you real estate."

And it turns out that investor fraud and defrauding the government for COVID loans and taxes and over leveraging your properties is not smart or sophisticated. It just works for you until it doesn't.

Eventually the entire thing falls apart and people start going to prison.

Our current landlord worked hard for what he built and is a multi millionaire with no debt.

The one he sold our last building to is a scammer and a fool who believes in cutting corners and cheating people. As a result, it's falling apart.

There is no substitute for work. You substitute work with lots of shortcuts, it only works until it doesn't.

I told Mark (the one we just signed with) that I don't blame him for selling the last building. I would too if it was only worth $800,000 maybe and some guy paid $2.3 million and the only "inspection" was "Hey, does that air conditioner work?"

He offloaded a problem building, at a huge profit, onto a guy who is very crooked and has no idea what he's doing and thinks that crime and fraud are the way you make money.