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Student Debt, PLUS Loans, and Social Security–Something to Watch Out For
As the student debt crisis continues to build, and as more and more families look to loans to cover the cost of higher education rising at a rate far exceeding inflation, the potential for parents to find a portion of their Social Security checks garnished to cover loans in default is becoming something retirees need to keep an eye on. This excerpt from a CNBC article by Tom Anderson puts the issue in perspective:
“In 2015, more than 210,000 people age 65 and older had parent PLUS loans, more than a quarter of those borrowers had defaulted, and more than 7,300 people had money taken out of their Social Security checks to pay back their parent PLUS loans, according to a recent report from the U.S. Government Accountability Office.”
PLUS loan balances (the acronym originally meant “Parent Loan for Undergraduate Students”) in 2016 reached the $74.5 billion level, and one of the basic concerns is that loans of this type can be underwritten without regard for affordability, a situation that has the potential for a substantial impact during times of lean finances. Check out Anderson’s full article here…
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