What happens now with the US Department of Education now that Elon Musk claims that it no longer exists? It's hard to know yet, and even more difficult after removing career government workers that we have known for years.
We are saddened to hear of contacts we know who have been fired: hard working and capable people, in an agency that has been chronically understaffed and politicized.
We also worry for the hundreds of thousands of student loan debtors who have borrower defense to repayment claims against schools that systematically defrauded them--and have not yet received justice.
And what about all those FAFSA (financial aid) forms for students starting and continuing their schooling? How will they be processed in a timely manner?
Notable actions the Department of Education has already taken include:
Dissolution of the Department’s Diversity & Inclusion Council, effective immediately;
Background:The Diversity & Inclusion Council was established following Executive Order 13583 under then - President Obama.President Trump has rescinded the Executive Orders that guide the Council and issued a new Executive Order, “Ending Radical and Wasteful Government DEI Programs and Preferencing,”
that terminates groups like the Diversity & Inclusion Council. DEI
documents issued and related actions taken by the Council have been
withdrawn.
Dissolution of the Employee Engagement
Diversity Equity Inclusion Accessibility Council (EEDIAC) within the
Office for Civil Rights (OCR), effective immediately and pursuant to
President Trump’s Executive Order “Ending Radical and Wasteful Government DEI Programs and Preferencing”;
Cancellation of ongoing DEI training and service contracts which total over $2.6 million;
Withdrawal of the Department’s Equity Action Plan;
Placement
of career Department staff tasked with implementing the previous
administration’s DEI initiatives on paid administrative leave; and
Identification
for removal of over 200 web pages from the Department’s website that
housed DEI resources and encouraged schools and institutions of higher
education to promote or endorse harmful ideological programs.
Rachel
Oglesby most recently served as America First Policy Institute's Chief
State Action Officer & Director, Center for the American Worker. In
this role, she worked to advance policies that promote worker freedom,
create opportunities outside of a four-year college degree, and provide
workers with the necessary skills to succeed in the modern economy, as
well as leading all of AFPI’s state policy development and advocacy
work. She previously worked as Chief of Policy and Deputy Chief of Staff
for Governor Kristi Noem in South Dakota, overseeing the implementation
of the Governor’s pro-freedom agenda across all policy areas and state
government agencies. Oglesby holds a master’s degree in public policy
from George Mason University and earned her bachelor’s degree in
philosophy from Wake Forest University.
Jonathan Pidluzny – Deputy Chief of Staff for Policy and Programs
Jonathan
Pidluzny most recently served as Director of the Higher Education
Reform Initiative at the America First Policy Institute. Prior to that,
he was Vice President of Academic Affairs at the American Council of
Trustees and Alumni, where his work focused on academic freedom and
general education. Jonathan began his career in higher education
teaching political science at Morehead State University, where he was an
associate professor, program coordinator, and faculty regent from
2017-2019. He received his Ph.D from Boston College and holds a
bachelor’s degree and master’s degree from the University of Alberta.
Chase Forrester – Deputy Chief of Staff for Operations
Virginia
“Chase” Forrester most recently served as the Chief Events Officer at
America First Policy Institute, where she oversaw the planning and
execution of 80+ high-profile events annually for AFPI’s 22 policy
centers, featuring former Cabinet Officials and other distinguished
speakers. Chase previously served as Operations Manager on the
Trump-Pence 2020 presidential campaign, where she spearheaded all event
operations for the Vice President of the United States and the Second
Family. Chase worked for the National Republican Senatorial Committee
during the Senate run-off races in Georgia and as a fundraiser for
Members of Congress. Chase graduated from Clemson University with a
bachelor’s degree in political science and a double-minor in Spanish and
legal studies.
Steve Warzoha – White House Liaison
Steve
Warzoha joins the U.S. Department of Education after most recently
serving on the Trump-Vance Transition Team. A native of Greenwich, CT,
he is a former local legislator who served on the Education Committee
and as Vice Chairman of both the Budget Overview and Transportation
Committees. He is also an elected leader of the Greenwich Republican
Town Committee. Steve has run and served in senior positions on numerous
local, state, and federal campaigns. Steve comes from a family of
educators and public servants and is a proud product of Greenwich Public
Schools and an Eagle Scout.
Tom Wheeler – Principal Deputy General Counsel
Tom
Wheeler’s prior federal service includes as the Acting Assistant
Attorney General for Civil Rights at the U.S. Department of Justice, a
Senior Advisor to the White House Federal Commission on School Safety,
and as a Senior Advisor/Counsel to the Secretary of Education. He has
also been asked to serve on many Boards and Commissions, including as
Chair of the Hate Crimes Sub-Committee for the Federal Violent Crime
Reduction Task Force, a member of the Department of Justice’s Regulatory
Reform Task Force, and as an advisor to the White House Coronavirus
Task Force, where he worked with the CDC and HHS to develop guidelines
for the safe reopening of schools and guidelines for law enforcement and
jails/prisons. Prior to rejoining the U.S. Department of Education, Tom
was a partner at an AM-100 law firm, where he represented federal,
state, and local public entities including educational institutions and
law enforcement agencies in regulatory, administrative, trial, and
appellate matters in local, state and federal venues. He is a frequent
author and speaker in the areas of civil rights, free speech, and
Constitutional issues, improving law enforcement, and school safety.
Craig Trainor – Deputy Assistant Secretary for Policy, Office for Civil Rights
Craig
Trainor most recently served as Senior Special Counsel with the U.S.
House of Representatives Committee on the Judiciary under Chairman Jim
Jordan (R-OH), where Mr. Trainor investigated and conducted oversight of
the U.S. Department of Justice, including its Civil Rights Division,
the FBI, the Biden-Harris White House, and the Intelligence Community
for civil rights and liberties abuses. He also worked as primary counsel
on the House Judiciary’s Subcommittee on the Constitution and Limited
Government’s investigation into the suppression of free speech and
antisemitic harassment on college and university campuses, resulting in
the House passing the Antisemitism Awareness Act of 2023. Previously, he
served as Senior Litigation Counsel with the America First Policy
Institute under former Florida Attorney General Pam Bondi, Of Counsel
with the Fairness Center, and had his own civil rights and criminal
defense law practice in New York City for over a decade. Upon graduating
from the Catholic University of America, Columbus School of Law, he
clerked for Chief Judge Frederick J. Scullin, Jr., U.S. District Court
for the Northern District of New York. Mr. Trainor is admitted to
practice law in the state of New York, the U.S. District Court for the
Southern and Eastern Districts of New York, and the U.S. Supreme Court.
Madi Biedermann – Deputy Assistant Secretary, Office of Communications and Outreach
Madi
Biedermann is an experienced education policy and communications
professional with experience spanning both federal and state government
and policy advocacy organizations. She most recently worked as the Chief
Operating Officer at P2 Public Affairs. Prior to that, she served as an
Assistant Secretary of Education for Governor Glenn Youngkin and worked
as a Special Assistant and Presidential Management Fellow at the Office
of Management and Budget in the first Trump Administration. Madi
received her bachelor’s degree and master of public administration from
the University of Southern California.
Candice Jackson – Deputy General Counsel
Candice
Jackson returns to the U.S. Department of Education to serve as Deputy
General Counsel. Candice served in the first Trump Administration as
Acting Assistant Secretary for Civil Rights, and Deputy General Counsel,
from 2017-2021. For the last few years, Candice has practiced law in
Washington State and California and consulted with groups and
individuals challenging the harmful effects of the concept of "gender
identity" in laws and policies in schools, employment, and public
accommodations. Candice is mom to girl-boy twins Madelyn and Zachary,
age 11.
Joshua Kleinfeld – Deputy General Counsel
Joshua
Kleinfeld is the Allison & Dorothy Rouse Professor of Law and
Director of the Boyden Gray Center for the Study of the Administrative
State at George Mason University’s Scalia School of Law. He writes and
teaches about constitutional law, criminal law, and statutory
interpretation, focusing in all fields on whether democratic ideals are
realized in governmental practice. As a scholar and public intellectual,
he has published work in the Harvard, Stanford, and University of
Chicago Law Reviews, among other venues. As a practicing lawyer, he has
clerked on the D.C. Circuit, Fourth Circuit, and Supreme Court of
Israel, represented major corporations accused of billion-dollar
wrongdoing, and, on a pro bono basis, represented children accused of
homicide. As an academic, he was a tenured full professor at
Northwestern Law School before lateraling to Scalia Law School. He holds
a J.D. in law from Yale Law School, a Ph.D. in philosophy from the
Goethe University of Frankfurt, and a B.A. in philosophy from Yale
College.
Hannah Ruth Earl – Director, Center for Faith-Based and Neighborhood Partnerships
Hannah
Ruth Earl is the former executive director of America’s Future, where
she cultivated communities of freedom-minded young professionals and
local leaders. She previously co-produced award-winning feature films as
director of talent and creative development at the Moving Picture
Institute. A native of Tennessee, she holds a master of arts in religion
from Yale Divinity School.
When
borrowers default on their federal student loans, the U.S. Department
of Education (“Department of Education”) can collect the outstanding
balance through forced collections, including the offset of tax refunds
and Social Security benefits and the garnishment of wages. At the
beginning of the COVID-19 pandemic, the Department of Education paused
collections on defaulted federal student loans.1
This year, collections are set to resume and almost 6 million student
loan borrowers with loans in default will again be subject to the
Department of Education’s forced collection of their tax refunds, wages,
and Social Security benefits.2
Among the borrowers who are likely to experience forced collections are
an estimated 452,000 borrowers ages 62 and older with defaulted loans
who are likely receiving Social Security benefits.3
This
spotlight describes the circumstances and experiences of student loan
borrowers affected by the forced collection of Social Security benefits.4
It also describes how forced collections can push older borrowers into
poverty, undermining the purpose of the Social Security program.5
Key findings
The
number of Social Security beneficiaries experiencing forced collection
grew by more than 3,000 percent in fewer than 20 years; the count is
likely to grow as the age of student loan borrowers trends older.
Between 2001 and 2019, the number of Social Security beneficiaries
experiencing reduced benefits due to forced collection increased from
approximately 6,200 to 192,300. This exponential growth is likely driven
by older borrowers who make up an increasingly large share of the
federal student loan portfolio. The number of student loan borrowers
ages 62 and older increased by 59 percent from 1.7 million in 2017 to
2.7 million in 2023, compared to a 1 percent decline among borrowers
under the age of 62.
The total amount
of Social Security benefits the Department of Education collected
between 2001 and 2019 through the offset program increased from $16.2
million to $429.7 million. Despite the exponential increase in
collections from Social Security, the majority of money the Department
of Education has collected has been applied to interest and fees and has
not affected borrowers’ principal amount owed. Furthermore, between
2016 and 2019, the Department of the Treasury’s fees alone accounted for
nearly 10 percent of the average borrower’s lost Social Security
benefits.
More than one in three
Social Security recipients with student loans are reliant on Social
Security payments, meaning forced collections could significantly
imperil their financial well-being. Approximately 37 percent of the
1.3 million Social Security beneficiaries with student loans rely on
modest payments, an average monthly benefit of $1,523, for 90 percent of
their income. This population is particularly vulnerable to reduction
in their benefits especially if benefits are offset year-round. In 2019,
the average annual amount collected from individual beneficiaries was
$2,232 ($186 per month).
The physical well-being of half of Social Security beneficiaries with student loans in default may be at risk.
Half of Social Security beneficiaries with student loans in default and
collections skipped a doctor’s visit or did not obtain prescription
medication due to cost.
Existing minimum income protections fail to protect student loan borrowers with Social Security against financial hardship.
Currently, only $750 per month of Social Security income—an amount that
is $400 below the monthly poverty threshold for an individual and has
not been adjusted for inflation since 1996—is protected from forced
collections by statute. Even if the minimum protected income was
adjusted for inflation, beneficiaries would likely still experience
hardship, such as food insecurity and problems paying utility bills. A
higher threshold could protect borrowers against hardship more
effectively. The CFPB found that for 87 percent of student loan
borrowers who receive Social Security, their benefit amount is below 225
percent of the federal poverty level (FPL), an income level at which
people are as likely to experience material hardship as those with
incomes below the federal poverty level.
Large
shares of Social Security beneficiaries affected by forced collections
may be eligible for relief or outright loan cancellation, yet they are
unable to access these benefits, possibly due to insufficient
automation or borrowers’ cognitive and physical decline. As many as
eight in ten Social Security beneficiaries with loans in default may be
eligible to suspend or reduce forced collections due to financial
hardship. Moreover, one in five Social Security beneficiaries may be
eligible for discharge of their loans due to a disability. Yet these
individuals are not accessing such relief because the Department of
Education’s data matching process insufficiently identifies those who
may be eligible.
Taken together,
these findings suggest that the Department of Education’s forced
collections of Social Security benefits increasingly interfere with
Social Security’s longstanding purpose of protecting its beneficiaries
from poverty and financial instability.
Introduction
When
borrowers default on their federal student loans, the Department of
Education can collect the outstanding balance through forced
collections, including the offset of tax refunds and Social Security
benefits, and the garnishment of wages. At the beginning of the COVID-19
pandemic, the Department of Education paused collections on defaulted
federal student loans. This year, collections are set to resume and
almost 6 million student loan borrowers with loans in default will again
be subject to the Department of Education’s forced collection of their
tax refunds, wages, and Social Security benefits.6
Among
the borrowers who are likely to experience the Department of
Education’s renewed forced collections are an estimated 452,000
borrowers with defaulted loans who are ages 62 and older and who are
likely receiving Social Security benefits.7
Congress created the Social Security program in 1935 to provide a basic
level of income that protects insured workers and their families from
poverty due to situations including old age, widowhood, or disability.8
The Social Security Administration calls the program “one of the most
successful anti-poverty programs in our nation's history.”9
In 2022, Social Security lifted over 29 million Americans from poverty,
including retirees, disabled adults, and their spouses and dependents.10
Congress has recognized the importance of securing the value of Social
Security benefits and on several occasions has intervened to protect
them.11
This
spotlight describes the circumstances and experiences of student loan
borrowers affected by the forced collection of their Social Security
benefits.12
It also describes how the purpose of Social Security is being
increasingly undermined by the limited and deficient options the
Department of Education has to protect Social Security beneficiaries
from poverty and hardship.
The forced collection of Social Security benefits has increased exponentially.
Federal
student loans enter default after 270 days of missed payments and
transfer to the Department of Education’s default collections program
after 360 days. Borrowers with a loan in default face several
consequences: (1) their credit is negatively affected; (2) they lose
eligibility to receive federal student aid while their loans are in
default; (3) they are unable to change repayment plans and request
deferment and forbearance;13 and (4) they face forced collections of tax refunds, Social Security benefits, and wages among other payments.14
To conduct its forced collections of federal payments like tax refunds
and Social Security benefits, the Department of Education relies on a
collection service run by the U.S. Department of the Treasury called the
Treasury Offset Program.15
Between
2001 and 2019, the number of student loan borrowers facing forced
collection of their Social Security benefits increased from at least
6,200 to 192,300.16
That is a more than 3,000 percent increase in fewer than 20 years. By
comparison, the number of borrowers facing forced collections of their
tax refunds increased by about 90 percent from 1.17 million to 2.22
million during the same period.17
This exponential growth of Social Security offsets between 2001 and 2019 is likely driven by multiple factors including:
Older
borrowers accounted for an increasingly large share of the federal
student loan portfolio due to increasing average age of enrollment and
length of time in repayment. Data from the Department of Education
(which is only available since 2017), show that the number of student
loan borrowers ages 62 and older, increased 24 percent from 1.7 million
in 2017 to 2.1 million in 2019, compared to less than 1 percent among
borrowers under the age of 62.18
A larger number of borrowers, especially older borrowers, had loans in default.
Data from the Department of Education show that the number of student
loan borrowers with a defaulted loan increased by 230 percent from 3.8
million in 2006 to 8.8 million in 2019.19 Compounding these trends is the fact that older borrowers are twice as likely to have a loan in default than younger borrowers.20
Due
to these factors, the total amount of Social Security benefits the
Department of Education collected between 2001 and 2019 through the
offset program increased annually from $16.2 million to $429.7 million
(when adjusted for inflation).21
This increase occurred even though the average monthly amount the
Department of Education collected from individual beneficiaries was the
same for most years, at approximately $180 per month.22
Figure 1: Number of Social Security beneficiaries and total amount collected for student loans (2001-2019)
Source: CFPB analysis of public data from U.S. Treasury’s Fiscal Data portal. Amounts are presented in 2024 dollars.
While the total collected from
Social Security benefits has increased exponentially, the majority of
money the Department of Education collected has not been applied to
borrowers’ principal amount owed. Specifically, nearly three-quarters of
the monies the Department of Education collects through offsets is
applied to interest and fees, and not towards paying down principal
balances.23
Between 2016 and 2019, the U.S. Department of the Treasury charged the
Department of Education between $13.12 and $15.00 per Social Security
offset, or approximately between $157.44 and $180 for 12 months of
Social Security offsets per beneficiary with defaulted federal student
loans.24 As a matter of practice, the Department of Education often passes these fees on directly to borrowers.25
Furthermore, these fees accounted for nearly 10 percent of the average
monthly borrower’s lost Social Security benefits which was $183 during
this time.26
Interest and fees not only reduce beneficiaries’ monthly benefits, but
also prolong the period that beneficiaries are likely subject to forced
collections.
Forced collections are compromising Social Security beneficiaries’ financial well-being.
Forced
collection of Social Security benefits affects the financial well-being
of the most vulnerable borrowers and can exacerbate any financial and
health challenges they may already be experiencing. The CFPB’s analysis
of the Survey of Income and Program Participation (SIPP) pooled data for
2018 to 2021 finds that Social Security beneficiaries with student
loans receive an average monthly benefit of $1,524.27
The analysis also indicates that approximately 480,000 (37 percent) of
the 1.3 million beneficiaries with student loans rely on these modest
payments for 90 percent or more of their income,28
thereby making them particularly vulnerable to reduction in their
benefits especially if benefits are offset year-round. In 2019, the
average annual amount collected from individual beneficiaries was $2,232
($186 per month).29
A
recent survey from The Pew Charitable Trusts found that more than nine
in ten borrowers who reported experiencing wage garnishment or Social
Security payment offsets said that these penalties caused them financial
hardship.30
Consequently, for many, their ability to meet their basic needs,
including access to healthcare, became more difficult. According to our
analysis of the Federal Reserve’s Survey of Household Economic and
Decision-making (SHED), half of Social Security beneficiaries with
defaulted student loans skipped a doctor’s visit and/or did not obtain
prescription medication due to cost.31
Moreover, 36 percent of Social Security beneficiaries with loans in
delinquency or in collections report fair or poor health. Over half of
them have medical debt.32
Figure 2: Selected financial experiences and hardships among subgroups of loan borrowers
Source: CFPB analysis of the Federal Reserve Board Survey of Household Economic and Decision-making (2019-2023).
Social Security recipients
subject to forced collection may not be able to access key public
benefits that could help them mitigate the loss of income. This is
because Social Security beneficiaries must list the unreduced amount of
their benefits prior to collections when applying for other means-tested
benefits programs such as Social Security Insurance (SSI), Supplemental
Nutrition Assistance Program (SNAP), and the Medicare Savings Programs.33
Consequently, beneficiaries subject to forced collections must report
an inflated income relative to what they are actually receiving. As a
result, these beneficiaries may be denied public benefits that provide
food, medical care, prescription drugs, and assistance with paying for
other daily living costs.34
Consumers’
complaints submitted to the CFPB describe the hardship caused by forced
collections on borrowers reliant on Social Security benefits to pay for
essential expenses.35
Consumers often explain their difficulty paying for such expenses as
rent and medical bills. In one complaint, a consumer noted that they
were having difficulty paying their rent since their Social Security
benefit usually went to paying that expense.36
In another complaint, a caregiver described that the money was being
withheld from their mother’s Social Security, which was the only source
of income used to pay for their mother’s care at an assisted living
facility.37
As forced collections threaten the housing security and health of
Social Security beneficiaries, they also create a financial burden on
non-borrowers who help address these hardships, including family members
and caregivers.
Existing minimum income protections fail to protect student loan borrowers with Social Security against financial hardship.
The
Debt Collection Improvement Act set a minimum floor of income below
which the federal government cannot offset Social Security benefits and
subsequent Treasury regulations established a cap on the percentage of
income above that floor.38
Specifically, these statutory guardrails limit collections to 15
percent of Social Security benefits above $750. The minimum threshold
was established in 1996 and has not been updated since. As a result, the
amount protected by law alone does not adequately protect beneficiaries
from financial hardship and in fact no longer protects them from
falling below the federal poverty level (FPL). In 1996, $750 was nearly
$100 above the monthly poverty threshold for an individual.39
Today that same protection is $400 below the threshold. If the
protected amount of $750 per month ($9,000 per year) set in 1996 was
adjusted for inflation, in 2024 dollars, it would total $1,450 per month
($17,400 per year).40
Figure
3: Comparison of monthly FPL threshold with the current protected
amount established in 1996 and the amount that would be protected with
inflation adjustment
Source: Calculations by the CFPB. Notes: Inflation adjustments based on the consumer price index (CPI).
Even if the minimum protected
income of $750 is adjusted for inflation, beneficiaries will likely
still experience hardship as a result of their reduced benefits.
Consumers with incomes above the poverty line also commonly experience
material hardship.41 This suggests that a threshold that is higher than the poverty level will more effectively protect against hardship.42
Indeed, in determining an income threshold for $0 payments under the
SAVE plan, the Department of Education researchers used material
hardship (defined as being unable to pay utility bills and reporting
food insecurity) as their primary metric, and found similar levels of
material hardship among those with incomes below the poverty line and
those with incomes up to 225 percent of the FPL.43
Similarly, the CFPB’s analysis of a pooled sample of SIPP respondents
finds the same levels of material hardship for Social Security
beneficiaries with student loans with incomes below 100 percent of the
FPL and those with incomes up to 225 percent of the FPL.44
The CFPB found that for 87 percent of student loan borrowers who
receive Social Security, their benefit amount is below 225 percent of
the FPL.45
Accordingly, all of those borrowers would be removed from forced
collections if the Department of Education applied the same income
metrics it established under the SAVE program to an automatic hardship
exemption program.
Existing options for relief from forced collections fail to reach older borrowers.
Borrowers
with loans in default remain eligible for certain types of loan
cancellation and relief from forced collections. However, our analysis
suggests that these programs may not be reaching many eligible
consumers. When borrowers do not benefit from these programs, their
hardship includes, but is not limited to, unnecessary losses to their
Social Security benefits and negative credit reporting.
Borrowers who become disabled after reaching full retirement age may miss out on Total and Permanent Disability
The
Total and Permanent Disability (TPD) discharge program cancels federal
student loans and effectively stops all forced collections for disabled
borrowers who meet certain requirements. After recent revisions to the
program, this form of cancelation has become common for those borrowers
with Social Security who became disabled prior to full retirement age.46 In 2016, a GAO study documented the significant barriers to TPD that Social Security beneficiaries faced.47
To address GAO’s concerns, the Department of Education in 2021 took a
series of mitigating actions, including entering into a data-matching
agreement with the Social Security Administration (SSA) to automate the
TPD eligibility determination and discharge process.48
This process was expanded further with new final rules being
implemented July 1, 2023 that expanded the categories of borrowers
eligible for automatic TPD cancellation.49 In total, these changes successfully resulted in loan cancelations for approximately 570,000 borrowers.50
However,
the automation and other regulatory changes did not significantly
change the application process for consumers who become disabled after
they reach full retirement age or who have already claimed the Social
Security retirement benefits. For these beneficiaries, because they are
already receiving retirement benefits, SSA does not need to determine
disability status. Likewise, SSA does not track disability status for
those individuals who become disabled after they start collecting their
Social Security retirement benefits.51
Consequently,
SSA does not transfer information on disability to the Department of
Education once the beneficiary begins collecting Social Security
retirement.52
These individuals therefore will not automatically get a TPD discharge
of their student loans, and they must be aware and physically and
mentally able to proactively apply for the discharge.53
The
CFPB’s analysis of the Census survey data suggests that the population
that is excluded from the TPD automation process could be substantial.
More than one in five (22 percent) Social Security beneficiaries with
student loans are receiving retirement benefits and report a disability
such as a limitation with vision, hearing, mobility, or cognition.54
People with dementia and other cognitive disabilities are among those
with the greatest risk of being excluded, since they are more likely to
be diagnosed after the age 70, which is the maximum age for claiming
retirement benefits.55
These
limitations may also help explain why older borrowers are less likely
to rehabilitate their defaulted student loans. Specifically, 11 percent
of student loan borrowers ages 50 to 59 facing forced collections
successfully rehabilitated their loans,56 while only five percent of borrowers over the age of 75 do so.57
Figure
4: Number of student loan borrowers ages 50 and older in forced
collection, borrowers who signed a rehabilitation agreement, and
borrowers who successfully rehabilitated a loan by selected age groups
Age Group
Number of Borrowers in Offset
Number of Borrowers Who Signed a Rehabilitation Agreement
Percent of Borrowers Who Signed a Rehabilitation Agreement
Number of Borrowers Successfully Rehabilitated
Percent of Borrowers who Successfully Rehabilitated
50 to 59
265,200
50,800
14%
38,400
11%
60 to 74
184,900
24,100
11%
18,500
8%
75 and older
15,800
1,000
6%
800
5%
Source: CFPB analysis of data provided by the Department of Education.
Shifting demographics of
student loan borrowers suggest that the current automation process may
become less effective to protect Social Security benefits from forced
collections as more and more older adults have student loan debt. The
fastest growing segment of student loan borrowers are adults ages 62 and
older. These individuals are generally eligible for retirement
benefits, not disability benefits, because they cannot receive both
classifications at the same time. Data from the Department of Education
reflect that the number of student loan borrowers ages 62 and older
increased by 59 percent from 1.7 million in 2017 to 2.7 million in 2023.
In comparison, the number of borrowers under the age of 62 remained
unchanged at 43 million in both years.58
Furthermore, additional data provided to the CFPB by the Department of
Education show that nearly 90,000 borrowers ages 81 and older hold an
average amount of $29,000 in federal student loan debt, a substantial
amount despite facing an estimated average life expectancy of less than
nine years.59
Existing exceptions to forced collections fail to protect many Social Security beneficiaries
In
addition to TPD discharge, the Department of Education offers reduction
or suspension of Social Security offset where borrowers demonstrate
financial hardship.60
To show hardship, borrowers must provide documentation of their income
and expenses, which the Department of Education then uses to make its
determination.61
Unlike the Debt Collection Improvement Act’s minimum protections, the
eligibility for hardship is based on a comparison of an individual’s
documented income and qualified expenses. If the borrower has eligible
monthly expenses that exceed or match their income, the Department of
Education then grants a financial hardship exemption.62
The
CFPB’s analysis suggests that the vast majority of Social Security
beneficiaries with student loans would qualify for a hardship
protection. According to CFPB’s analysis of the Federal Reserve Board’s
SHED, eight in ten (82 percent) of Social Security beneficiaries with
student loans in default report that their expenses equal or exceed
their income.63
Accordingly, these individuals would likely qualify for a full
suspension of forced collections. Yet the GAO found that in 2015 (when
the last data was available) less than ten percent of Social Security
beneficiaries with forced collections applied for a hardship exemption
or reduction of their offset.64
A possible reason for the low uptake rate is that many beneficiaries or
their caregivers never learn about the hardship exemption or the
possibility of a reduction in the offset amount.65
For those that do apply, only a fraction get relief. The GAO study
found that at the time of their initial offset, only about 20 percent of
Social Security beneficiaries ages 50 and older with forced collections
were approved for a financial hardship exemption or a reduction of the
offset amount if they applied.66
Conclusion
As
hundreds of thousands of student loan borrowers with loans in default
face the resumption of forced collection of their Social Security
benefits, this spotlight shows that the forced collection of Social
Security benefits causes significant hardship among affected borrowers.
The spotlight also shows that the basic income protections aimed at
preventing poverty and hardship among affected borrowers have become
increasingly ineffective over time. While the Department of Education
has made some improvements to expand access to relief options,
especially for those who initially receive Social Security due to a
disability, these improvements are insufficient to protect older adults
from the forced collection of their Social Security benefits.
Taken
together, these findings suggest that forced collections of Social
Security benefits increasingly interfere with Social Security’s
longstanding purpose of protecting its beneficiaries from poverty and
financial instability. These findings also suggest that alternative
approaches are needed to address the harm that forced collections cause
on beneficiaries and to compensate for the declining effectiveness of
existing remedies. One potential solution may be found in the Debt
Collection Improvement Act, which provides that when forced collections
“interfere substantially with or defeat the purposes of the payment
certifying agency’s program” the head of an agency may request from the
Secretary of the Treasury an exemption from forced collections.67
Given the data findings above, such a request for relief from the
Commissioner of the Social Security Administration on behalf of Social
Security beneficiaries who have defaulted student loans could be
justified. Unless the toll of forced collections on Social Security
beneficiaries is considered alongside the program’s stated goals, the
number of older adults facing these challenges is only set to grow.
Data and Methodology
To
develop this report, the CFPB relied primarily upon original analysis
of public-use data from the U.S. Census Bureau Survey of Income and
Program Participation (SIPP), the Federal Reserve Board Board’s Survey
of Household Economics and Decision-making (SHED), U.S. Department of
the Treasury, Fiscal Data portal, consumer complaints received by the
Bureau, and administrative data on borrowers in default provided by the
Department of Education. The report also leverages data and findings
from other reports, studies, and sources, and cites to these sources
accordingly. Readers should note that estimates drawn from survey data
are subject to measurement error resulting, among other things, from
reporting biases and question wording.
Survey of Income and Program Participation
The
Survey of Income and Program Participation (SIPP) is a nationally
representative survey of U.S. households conducted by the U.S. Census
Bureau. The SIPP collects data from about 20,000 households (40,000
people) per wave. The survey captures a wide range of characteristics
and information about these households and their members. The CFPB
relied on a pooled sample of responses from 2018, 2019, 2020, and 2021
waves for a total number of 17,607 responses from student loan borrowers
across all waves, including 920 respondents with student loans
receiving Social Security benefits. The CFPB’s analysis relied on the
public use data. To capture student loan debt, the survey asked to all
respondents (variable EOEDDEBT): Owed any money for student loans or
educational expenses in own name only during the reference period. To
capture receipt of Social Security benefits, the survey asked to all
respondents (variable ESSSANY): “Did ... receive Social Security
benefits for himself/herself at any time during the reference period?”
To capture amount of Social Security benefits, the survey asked to all
respondents (variable TSSSAMT): “How much did ... receive in Social
Security benefit payment in this month (1-12), prior to any deductions
for Medicare premiums?”
The
Federal Reserve Board’s Survey of Household Economics and
Decision-making (SHED) is an annual web-based survey of households. The
survey captures information about respondents’ financial situations. The
CFPB relied on a pooled sample of responses from 2019 through 2023
waves for a total number of 1,376 responses from student loan borrowers
in collection across all waves. The CFPB analysis relied on the public
use data. To capture default and collection, the survey asked all
respondents with student loans (variable SL6): “Are you behind on
payments or in collections for one or more of the student loans from
your own education?” To capture receipt of Social Security benefits, the
survey asked to all respondents (variable I0_c): “In the past 12
months, did you (and/or your spouse or partner) receive any income from
the following sources: Social Security (including old age and DI)?”
Total Approved Student Debt Relief Reached Almost $189 Billion for 5.3 Million Borrowers
The Biden-Harris Administration today announced its final round of
student loan forgiveness, approving more than $600 million for 4,550
borrowers through the Income-Based Repayment (IBR) Plan and 4,100
individual borrower defense approvals. The Administration leaves office
having approved a cumulative $188.8 billion in forgiveness for 5.3
million borrowers across 33 executive actions. The U.S. Department of
Education (Department) today also announced that it has completed the
income-driven repayment payment count adjustment and that borrowers will
now be able to see their income-driven repayment counters when they log
into their accounts on StudentAid.gov. Finally, the Department took
additional actions that will allow students who attended certain schools
that have since closed to qualify for student loan discharges.
“Four
years ago, President Biden made a promise to fix a broken student loan
system. We rolled up our sleeves and, together, we fixed existing
programs that had failed to deliver the relief they promised, took bold
action on behalf of borrowers who had been cheated by their
institutions, and brought financial breathing room to hardworking
Americans—including public servants and borrowers with disabilities.
Thanks to our relentless, unapologetic efforts, millions of Americans
are approved for student loan forgiveness,” said U.S. Secretary of
Education Miguel Cardona. “I’m incredibly proud of the Biden-Harris
Administration’s historic achievements in making the life-changing
potential of higher education more affordable and accessible for more
people.”
From Day One the Biden-Harris Administration took steps
to rethink, restore, and revitalize targeted relief programs that
entitle borrowers to relief under the Higher Education Act but that
failed to live up to their promises. Through a combination of executive
actions and regulatory improvements, the Biden-Harris Administration
produced the following results for borrowers:
Fixed longstanding problems with Income-Driven Repayment (IDR). The Administration has approved1.45
million borrowers for $57.1 billion in loan relief, including $600
million for 4,550 borrowers announced today for IBR forgiveness.
IDR
plans help keep payments manageable for borrowers and have provided a
path to forgiveness after an extended period. These plans started in the
early 1990s, but prior to the Biden-Harris Administration taking
office, just 50 borrowers had ever had their loans forgiven. The
Administration corrected longstanding failures to accurately track
borrower progress toward forgiveness and addressed past instances of
forbearance steering whereby servicers inappropriately advised borrowers
to postpone payments for extended periods of time. These totals also
include borrowers who received forgiveness under the Saving on a
Valuable Education (SAVE) plan prior to court orders halting forgiveness
under the SAVE plan.
Today, the Department also announced the
completion of the IDR payment count adjustment, correcting eligible
payment counts. While the payment count adjustment is now complete,
borrowers who were affected by certain servicer transitions in 2024 may
see one or two additional months credited in the coming weeks. The
Department is also launching the ability for borrowers to track their
IDR progress on StudentAid.gov. Borrowers can now log in to their
accounts and see their total IDR payment count and a month-by-month
breakdown of progress.
Restored the promise of Public Service Loan Forgiveness (PSLF). The Administration has approved 1,069,000 borrowers for $78.5 billion in forgiveness.
The
PSLF Program provides critical support to teachers, service members,
social workers, and others engaged in public service. But prior to this
Administration taking office, just 7,000 borrowers had received
forgiveness and the overwhelming majority of borrowers who applied had
their applications denied. The Biden-Harris Administration fixed this
program by pursuing regulatory improvements, correcting long-standing
issues with tracking progress toward forgiveness and misuse of
forbearances, and implementing the limited PSLF waiver to avoid harm
from the pandemic.
Automated discharges and simplified eligibility criteria for borrowers with a total and permanent disability. The Administration has approved 633,000 borrowers for $18.7 billion in loan relief.
Borrowers
who are totally and permanently disabled may be eligible for a total
and permanent disability (TPD) discharge. The Biden-Harris
Administration changed regulations to automatically forgive loans for
eligible borrowers based upon a data match with the Social Security
Administration (SSA). This helped hundreds of thousands of borrowers who
were eligible for relief but hadn’t managed to navigate paperwork
requirements. The Department also made it easier for borrowers to
qualify for relief based upon SSA determinations, made it easier to
complete the TPD application, and eliminated provisions that had caused
many borrowers to have their loans reinstated.
Delivered
long-awaited help to borrowers ripped off by their institutions, whose
schools closed, or through related court settlements. The Administration has approved just under 2 million borrowers for $34.5 billion in loan relief.
For
years, students had sought relief from the Department through borrower
defense to repayment—a provision that allows borrowers to have their
loans forgiven if their college engaged in misconduct related to the
borrowers’ loans. The Department delivered long-awaited relief
to borrowers who attended some of the most notoriously predatory
institutions to ever participate in the federal financial aid programs.
This included approving for discharge all remaining outstanding loans
from Corinthian Colleges, as well as group discharges for ITT Technical
Institute, the Art Institutes, Westwood College, Ashford University, and
others. The Department also settled a long-running class action lawsuit
stemming from allegations of inaction and the issuance of form denials,
allowing it to begin the first sustained denials of non-meritorious
claims.
Today, the Department also approved 4,100 additional
individual borrower defense applications for borrowers who attended
DeVry University, based upon findings announced in February 2022.
“For
decades, the federal government promised to help people who couldn’t
afford their student loans because they were in public service, had
disabilities, were cheated by their college, or who had completed
decades of payments. But it rarely kept those promises until now,” said
U.S. Under Secretary of Education James Kvaal. “These permanent reforms
have already helped more 5 million borrowers, and many more borrowers
will continue to benefit.”
The table below compares the progress
made by the Biden-Harris Administration in these key discharge areas
compared to other administrations.
Borrowers approved for forgiveness
Prior Administrations
Biden-Harris Administration
Borrower Defense (Since 2015)
53,500
1,767,000*
Public Service Loan Forgiveness (Since 2017)
7,000
1,069,000
Income-Driven Repayment (all-time)
50
1,454,000
Total and Permanent Disability (Since 2017)
604,000
633,000
*
Includes 107,000 borrowers and $1.25 billion captured by an extension
of the closed-school lookback window at ITT Technical Institute.
Additional actions related to closed school discharges
The
Department today also announced additional actions that will make more
borrowers eligible for a closed school loan discharge. Generally, a
borrower qualifies for a closed school discharge if they did not
complete their program and were either still enrolled when the school
closed or left without graduating within 120 days before it closed. .
However, the Department has determined that several schools closed under
exceptional circumstances that merit allowing borrowers who did
complete and were enrolled in the school more than 120 days prior to the
closure to qualify for a closed school discharge. justify extending the
look-back window beyond the applicable 120 or 180 days--allowing
additional borrowers to qualify for a closed school discharge.
Generally, eligible borrowers will have to apply for these discharges,
but the Secretary has directed Federal Student Aid to make borrowers
aware of their eligibility, and to pursue automatic discharges for those
affected by closures that took place between 2013 and 2020 and who did
not enroll elsewhere within three years of their school closing.
These adjusted look-back windows are:
To
May 6, 2015, for all campuses owned at the time by the Career Education
Corporation (CEC), which have since closed. That is the day CEC
announced it would close or sell all campuses except for two brands.
This affected the Art Institutes, Le Cordon Bleu, Brooks Institute,
Missouri College, Briarcliffe College, and Sanford-Brown.
To
December 16, 2016, for campuses owned by the Education Corporation of
America (ECA) on that date that closed. ECA operated Virginia College,
Brightwood College, EcoTech, and Golf Academies and started on the path
to closure after its accreditation agency lost federal recognition and
ECA could not obtain accreditation elsewhere.
To October 17,
2017 for all campuses owned or sold on that date by the Education
Management Corporation (EDMC) and that later closed. That is the day
EDMC sold substantially all of its assets to Dream Center Educational
Holdings. The decision affects borrowers who attended the Art
Institutes, including the Miami International University of Art &
Design and Argosy University.
To April 23, 2021, for Bay State
College. That is the day this Massachusetts-based college began to face
significant accreditation challenges, which eventually led to the
school losing accreditation and closing in August 2023.
Borrowers who want more information about closed school discharge, including how to apply, can visit StudentAid.gov/closedschool.
A state-by-state breakdown of various forms of student debt relief approved by the Biden-Harris Administration is available here.
The Higher Education Inquirer has received all the current contracts between the US Department of Education and Maximus/AidVantage through a Freedom of Information Act (FOIA) request. Maximus serves millions of student loan debtors and has faced increased scrutiny (and loss of revenues) for not fulfilling their duties on time.
The FOIA response (23-01436-F) consists of a zip file of 998 pages in 5 separate files. HEI is sharing this information with any news outlet or organization for free, however we would appreciate an acknowledgement of the source.
We have already reached out to a number of organizations, including the Student Borrower Protection Center, the Debt Collective, the Project on Predatory Lending, the NY Times, ProPublica, and Democracy Now! We have also posted this article at the r/BorrowerDefense subreddit.
