A KPIX 5 ConsumerWatch Report

SAN FRANCISCO (KPIX) — Like many Bay Area retirees, 72-year-old Eileen Joyce relies on Social Security to get by, but last year Joyce’s $852 monthly payment was slashed by $102 — the government’s last-ditch attempt to recover $5,000 Joyce borrowed decades ago to attend graduate school.

“I was very surprised. I had believed up until then that was a protected source of income,” Joyce explained. “I was already living on not enough money for any real quality of life.”

Joyce is among the estimated 2 million Americans age 60 and older who are still carrying student debt — and learning too late that their Social Security benefits could be in jeopardy. That’s because the government has the power to seize portions of the pay or Social Security checks of those who have stopped paying their federal student loans. It can even confiscate tax rebates.

“It’s a pretty extreme hardship,” according to Mariella Castaldi of the East Bay Community Law Center. “People come in despair, saying ‘They’re going to take my money.’”

In the past year, the government has withheld Social Security benefits from 140,000 delinquent student loan borrowers, according to the Dept. of the Treasury. That’s triple the number a decade ago.

Castaldi says many of her clients simply can’t deal with outstanding student debt at that point in their lives. “People are getting scared and brushing it under the rug.”

She says it’s also not helping that the government increasingly relies on private collection agencies to go after delinquent borrowers. “Our clients are not being given the full range of options,” Castaldi said.

She advises clients to negotiate an income-based repayment plan. For people with very low incomes, payments could be as low as five or ten dollars a month. An option, that would have helped Eileen Joyce avoid the cut in benefits, had she been made aware of it in time. Instead, Joyce turned to the East Bay Community Law Center and eventually had her loan discharged, due to a long-standing disability.

She says the months of lower benefit checks took a toll.

“I would run out of money for food every month,” Joyce recalled.

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