From Smart Money
Everyone knows that seniors like to do things for their children and grandchildren. Many a good-hearted grandma and grandpa have co-signed student loans, instinctively trusting the academy’s promise that higher education will deliver a better life to their loved ones. And some seniors have taken advantage of government-sponsored loans to pursue studies they never had time for in their prime working years.
Then along comes the Obama economy, and, well- BLAM! Unemployment rates for young adults have skyrocketed, making it impossible for them to pay off the loans. And seniors themselves, on fixed incomes in a stagnant yet inflating economy, are finding it very hard to make ends meet. And then the government comes after them regarding the loans.
According to a study by SmartMoney, the federal government is docking the Social Security checks of delinquent seniors; the number has risen from 6 cases in 2000 to 60,000 cases in 2007 to 115,000 in 2012. And Uncle Sam’s cut can be steep:
The amount that the government withholds varies widely, though it runs up to 15%. Assuming the average monthly Social Security benefit for a retired worker of $1,234, that could mean a monthly haircut of almost $190. “This is going to catch an awful lot of people off guard and wreak havoc on their financial lives,” says Sheryl Garrett, a financial planner in Eureka Springs, Ark.
The academic establishment has been thriving on the government’s lending largesse, which removes any incentive for colleges and universities to control their costs. Now elderly borrowers, stuck with huge debt tabs for an overpriced education and facing a deeply depressed economy without adequate savings, are facing a financial calamity.
One would think that the academy, so quick to point out the failings of the rest of society, would be feeling a little guilty at this point. But one would be wrong.