Posted on 06/30/2015 8:40:54 AM PDT by Hojczyk
A fast-growing number of seniors are hitting retirement with a student debt burden. Even their Social Security is at risk
Most debt you can get out of—painful as it might be. Credit card debt can be cleared in bankruptcy. A mortgage can end in foreclosure. But student debt is more sticky, and it turns out it can have big consequences in retirement.
Last year, Richard Minuti’s Social Security payments were cut by 10%.
The Philadelphia native was already earning only a bit over $10,000 a year, including some part-time work as a tutor. “I was desperate,” says Minuti. “Taking 10% of a person’s pay who’s trying to live with bills, that’s the cruelty of it.”
The Treasury Department was taking the money to pay for federal student loans he had taken out years before. Just before age 50, Minuti had gone back to college to get a second bachelor’s degree and a better job in social work and counseling. But the non-profit jobs he landed afterwards were lower paying, and he defaulted on the debt.
Student debt’s painful new twist
The number of seniors whose Social Security checks were garnished rose by roughly six times over the past decade, from about 6,000 to 36,000 people, says the GAO. Legislation from the mid-1990s ensured recipients could still get a minimum of $750 a month. At the time, this was enough to keep them from sliding below the poverty threshold. But to meet the current threshold, Congress would need to increase this to above $1,000 a month.
(Excerpt) Read more at time.com ...
Declare the pennies on your eyes.
You’re solution is the most logical I have seen. Some here will insist that it all get paid back, but since that will never happen, get us out of the student loan business.
Maybe we should bring back debtors prison?
I don’t have a problem with this.
Taxpayers present or future are stuck with paying for both.
What part of the contract to borrow money, do you not understand?
Well, I’m in the tax department of my company and there’s a lot of job security and unexpectedly I like what I do.
Our consultant does personal property taxes for thousands of locations for various companies and judging by photos of his house I’ve seen it is a VERY good career for him.
My guess is that they didn't initially go to a community college before finishing their undergraduate degree at a 4 year university. Instead, they borrowed money to go all 4 years at the University.
I further assume, instead of entering the work force after getting their degree, and going for their masters one or two classes at a time at night, they went fulltime for two years, and once again, simply borrowed the money to go fulltime.
So now they have the benefit of their education, and if they are bailed out, it does two things. One, it rewards their stupidity (and maybe laziness) for borrowing all the money in the first place. But two, it would reward them with the education and the corresponding earning power of obtaining the degrees, without having to pay for them. Someone explain how that is equitable in our current system.
That may not be a fatal problem, but it will happen. The cost of the loan programs will thus devolve onto the next generation of borrowers that way, but then the cost of any of the alternatives, including doing nothing at all, always devolves onto the next generation of borrowers anyway. That's how we got into this mess.
I'd love to see a further discussion of the plan.
These people are honest people. They will pay off their debts no matter what. They are not asking or expecting to be bailed out. But I do think they probably could have found cheaper routes to getting their degrees, as you suggest. I do know that part of their education was through Christian colleges, which can be as insanely priced as the secular colleges.
To bad or not to bad?
The Dirty Dan can be a thrill ride!
I worked at the University of Chicago, live in the west suburbs. To avoid the Ryan we(car pool) occasionally cut across Englewood and Chicago Lawn. Not for the faint of heart! Also never drive a car of value. Or clean!
A friend was on the Ryan when a local overran the fence, down the embankment and center punched his car!!!
How do you prepare for that?
Precisely. The parents should have been smart enough to see this coming, just as junior, who wanted a 4-year degree in “The Mating Habits of the Red Wiggler”.
Stupid, meet Clueless, your new roommate. Your dinner of crow and dingleberries is served at 6:00. Entertainment will be at 7:00. Tonight it's Marvin and His Flaming Suppositories. Tomorrow you will enjoy Marcie and Her Dancing Arthritic Tortoise. And as always, the Career Office is open daily, 9-5. This week we've got an opening for a sea bat feeder.
SLIGHT correction:
1. Government gives XYZ taxpayer monies for liberal indoctrination (aka ‘higher education’), regardless nor care if/when said monies can be repaid, nor if field of study is viable to ensure repayment.
Actually, they already have existing staff in place which will hold up transcripts, delay graduation and the like if the tuition and fees aren't paid up.
Yes, this will load more work on them, but there are more than enough do little or nothing people on most university payrolls that they can be assigned these duties without breaking a sweat.
As far as raising tuition to cover these extra costs, it shouldn't happen.
That's why the institutions which service these loans get to skim off 5% for their trouble, or actually 6.67% (5% of the 75% they need to collect from the borrowers.) Of course, some of these loans will never even collect 75%, so they will also have to cover losses, so it may be closer to 5% or even less if they originated a lot of loans on useless degrees. Same risk a bank takes for loaning to risky developers.
Why do the couple you speak of feel obligated to pay their children’s student loans?
I don’t know about you, but I adjust my withholding so that I end the year owing a few bucks (but not enough to trigger penalties/interest).
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I always do that but in 2012, my wife and I adopted two children and in the excitement of it all, it never occurred to me how those two new dependents would affect our income tax return. When I filed for 2012 we got over $7,000 refund. I quickly adjusted withholding accordingly.
You raised your kids right. And please thank the Marine, on my behalf, for his service.
Going back to school is basically a way for some people to avoid working.
I went back at 30 to get an Accounting degree because it was FREE. My company paid for it.
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