Relief for Older Americans with Student Loans

photo of an aging person's handsAn increasing number of older Americans have defaulted on their federal student loan debt. To recover this debt, the federal government can withhold a portion of Social Security payments—a process known as offsetting.

A team led by Allison Bawden, a director in our Education, Workforce, and Income Security team, recently looked at older Americans’ student loan debt and the Social Security offset program. Listen to what they found:


Today’s WatchBlog further explores the issue.

Characteristics of Older Borrowers with Social Security Offsets

About 114,000 borrowers age 50 and older had Social Security benefits withheld to repay student loan debt in fiscal year 2015—a more than four-fold increase since 2002. This number is expected to continue to grow given the increasing number of older borrowers and their high rates of default.

We found that older borrowers subject to Social Security offsets had often held this debt for 20 years or more. Most had taken out student loans only for their own education in their 30s and 40s, and most owed less than $10,000. Their typical monthly offset was just over $140, and almost half of them were subject to the maximum possible withholding—15% of their benefit payment.

Offsets Increasingly Reduce Benefits below the Poverty Guideline

Although the amount the government can withhold from a borrower’s Social Security payment is limited by a protective threshold, many older borrowers have seen their benefits reduced below the poverty guideline.

The Social Security offset threshold was implemented by regulation in 1998 to prevent undue financial hardship on borrowers unable to repay their debts. However, the threshold has not been adjusted for increases in costs of living since then.

From 1998 to 2016 the value of the $750 threshold relative to the poverty guideline dropped from 112% to 76%. As a result, the number of older borrowers subject to offsets with benefits below the poverty guideline grew from 8,300 in 2004, to 67,300 in 2015.

Figure 9: Number of Borrowers Age 50 and Older Whose Social Security Benefits Are below the Poverty Threshold after Offset for Education Debt, Fiscal Years 2004 to 2015(Excerpted from GAO-17-45)

Some Are Eligible for Relief But Don’t Get It

While taxpayers have an interest in federal student loans being repaid, in certain cases, borrowers can apply for relief from Social Security offsets. For example, borrowers who have a permanent disability can have their debt cancelled through a total and permanent disability discharge.

However, we found that many eligible borrowers do not apply. Moreover, each year tens of thousands of borrowers initially approved for such discharges have their loans reinstated during a 3-year monitoring period—largely for failure to submit a required income verification form. We found that this process could be improved through automating income verification.

For more information about repayment and relief options for older borrowers—and our recommendations for improving them—read our full report.


  • Questions on the content of this post? Contact Allison Bawden at BawdenA@gao.gov
  • Comments on GAO’s WatchBlog? Contact blog@gao.gov.
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