Federal benefits can be taken to repay federal student loans
Going to college is something that people all across the U.S. strive to do. Unfortunately, getting an advanced degree is not a guarantee that you will be gainfully employed during the years it takes to repay loans. People can ultimately spend years or decades paying down the loans they took out for college; during this time, it is possible for a person to get behind on payments and struggle with debt.
If this is a situation in which you have found yourself, you should be prepared for what could happen if you go into default on your student loans. Unpaid loans can lead to mounting debt and creditor harassment, and it could also mean the loss of some critical federal benefits you may be receiving.
Most importantly, you could lose a portion of your Social Security or disability benefits if you collect more than $9,000 in these benefits per year. In fact, up to 15 percent of your federal benefits could be taken in order to repay a student loan.
It may seem as though people collecting Social Security benefits would likely not also be paying student loans, but the fact is this is not uncommon. Older workers going back to school to earn an advanced and/or additional degree to improve their professional life can take on more debt than they expect. Further, parents or even grandparents may take out loans for kids; in many cases, they can’t easily pay back the debt if they retire or having to stop working due to disability.
In these situations, a person’s federal benefits could be in jeopardy.
Considering how crucial these benefits can be and how quickly debt problems can spiral out of control, it can be wise to consult a lawyer before the situation gets dire. Protecting your benefits, wages and property will require some action and knowing what steps you need to take to do this can help you also protect your financial future.
Source: FindLaw.com, “Consequences of a Student Loan Default,” accessed on Dec. 14, 2015