In response to a January 13 policy memo from the Education Department, Sameer Gadkaree, President of The Institute for College Access & Success (TICAS), issued the following statement:
“We applaud the Biden Administration for its newly released policy directive outlining how the Office of Federal Student Aid can better protect millions of federal student loan borrowers from the harm of loan default.
“The policies outlined in the memo reflect longstanding TICAS recommendations to make it easier for borrowers to access affordable student loan payments and reduce the punitive and self-defeating consequences of student loan default.
“Notably, the memo outlines a policy to protect more of a borrower’s Social Security benefits from being seized for defaulted debt. Social Security benefit seizure is one of the many harsh consequences that the federal government imposes on those facing student loan default, alongside garnishing wages and seizing tax refunds for Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) recipients.
“By seizing these benefits, the federal government takes away critical financial lifelines that reduce poverty for millions of families. A recent report from the Consumer Financial Protection Bureau highlights how such collections can ‘push older borrowers into poverty, undermining the purpose of the Social Security program.’
The vast majority of those who default on student loans come from very-low-income backgrounds and have faced persistent economic and social vulnerability: nearly 90 percent of those who default were Pell Grant recipients, meaning they likely entered college with a household income of less than $40,000.
“By better protecting low-income borrowers from having their wages and benefits seized, the federal government can help struggling borrowers get back on their feet rather than plunging them more deeply into poverty.”
