GAO: Report Says Older Persons Hit Hard by Student Loan Debt

Published in Pawtucket Times, September 19, 2014

By Herb Weiss

In her late 20s, Janet Lee Dupree took out a $ 3,000 student loan to help finance her undergraduate degree. While acknowledging that she did not pay off the student loan when she should have, even paying thousands of dollars on this debt, today the 72-year-old, still owes a whopping $15,000 because of compound interest and penalties. The Ocala, Florida resident, in poor health, will never pay off this student loan especially because all she can afford to pay is the $50 the federal government takes out of her Social Security check each month.

Citing Dupree’s financial problems in her golden years in his opening remarks at a Senate Panel hearing in Room 562 of the Dirksen Senate Office Building, Chairman Bill Nelson (D-FL), of the Senate Special Committee on Aging, used his legislative bully pulpit to dispel the myth that student loan debt only happens to young students. “Well, as it turns out, that’s increasingly not the case,” he said.

Student Loan Debt Impacts Seniors, Too

But, last week’s Senate Aging panel hearing also put the spot light on fifty seven-year-old Rosemary Anderson, a witness who traveled from Watsonville, California, to inside Washington’s Beltway, detailing her student loan debt. Anderson remarked how she had accumulated a $126,000 loan debt (initially $64,000) to pay for her bachelor’s and master’s degree. A divorce, health problems combined with an underwater home mortgage kept her from paying anything on her student loan for eight years.

Anderson told Senate Aging panel members that with new terms to paying off her student loan debt, she expects to pay $526 a month for 24 years to settle the defaulted loan, setting her debt at age 81. The aging baby boomer will ultimately pay $87,487 more than her original student loan amount.

Like Anderson, a small but growing percentage of older Americans who are delinquent in paying off their student debts worry about their Social Security benefits garnished, drastically cutting their expected retirement income.

According to a 22 page Government Accountability Office (GAO) report, “Inability to Repay Student Loans May Affect Financial Security of a Small Percentage of Retirees,” released at the Sept. 10 Senate panel hearing, the amount that older Americans owe in outstanding federal student loans has increased six-fold, from $2.8 billion in 2005 to more than $18 billion last year. Student loan debt for all ages totals $ 1 trillion.

The GAO report noted that student loan debt reduces net worth and income, eroding the older person’s retirement security.

Nelson observed, “Large amounts of any kind of debt can put a person’s finances at risk, but I think that Ms. Dupree’s story shows that student debt has real consequences for those in or near retirement. And, the need to juggle debt on a fixed income may increase the likelihood of student loan default.”

Although the newly released GAO report acknowledged that seniors account for a small fraction of student loan debt holders, it noted that the numbers of seniors facing student loan debt between 2004 and 2010 had quadrupled to 706,000 households. Roughly 80 percent of the student loan debt held by retirement-aged Americans was for their own education, while only 20 percent of loans were taken out went to help finance a child or dependent’s education, the report said.

Senator Sheldon Whitehouse (D-RI), who sits on the Senate Special Committee on Aging, acknowledges that student loan debt is a burden for thousands of Rhode Islanders, including a growing number of retirement-age borrowers who either took out student loans as young adults, or when they changed careers, or helped pay off a child’s education. “Student debt presents unique challenges to these older borrowers, who risk garnishment of Social Security benefits, accrual of interest, and additional penalties if they are forced to default,” says Whitehouse, stressing that pursuing an education should not result in a lifetime of debt.

Whitehouse sees the Bank on Students Emergency Loan Refinancing Act, which would allow approximately 88,000 Rhode Islanders to refinance existing student loans at the low rates that were available in 2013-2014, as a legislative fix to help those who have defaulted on paying off their student loans. “By putting money back in the pockets of Rhode Islanders we can help individual borrowers make important long-term financial decisions that will ultimately benefit the economy as a whole,” he says.

Garnishing Social Security

The GAO reports finds that student loan debt has real consequences for those in or near retirement The need to juggle debt on a fixed income may increase the likelihood of student loan default. In 2013, the U.S. Department of the Treasury garnished the Social Security retirement and survivor benefits of 33,000 people to recoup federal student loan debt. When the government garnishes a Social Security check, multiple agencies can levy fees in addition to the amount collected for the debt, making it even more challenging for seniors to pay off their loan.

Ranking Member, Susan M. Collins (R-ME) Ranking, on the Senate Panel, warned [because of a 1998 law] seniors with defaulted student loans may even see their Social Security checks slashed to see their Social Security check to $750 a month, a floor set by Congress in 1998. “This floor was not indexed for inflation, and is now far below the poverty line, adds Collins, who says she plans to introduce legislation shortly to adjust this floor for inflation and index it going forward, to make sure garnishment does not force seniors into poverty.

According to an analysis of government data detailed on the CNNMoney website, “More than 150,000 older Americans had their Social Security checks docked last year for delinquent student loans.”

Unlike other types of consumer debt, student loans can’t be discharged in bankruptcy. Besides docking Social Security, the federal government can use a variety of ways to collect delinquent student loans, specifically docking wages or taking tax refund dollars. These strategies also cutting the income of the older person.

Some Final Thoughts…

“It’s very important that we focus on the big picture and the implications in play,” said AARP Rhode Island State Director Kathleen Connell, noting that “Education debt is becoming a significant factor for younger workers in preparing for retirement, delaying the ability of people to retire and threatening a middle-class standard of living, both before and after they retire.

Connell says, “Its serious concern for some older Americans as approximately 6.9 million carry student loan debt – some dating back to their youth. But others took on new debt when they returned to school later in life and many others have co-signed for loans with their children or grandchildren to help them deal with today’s skyrocketing college costs.”

“It’s not just a matter of Federal student loan debt being garnished from Social Security payments if it has not been repaid, “ Connell added. “Outstanding federal debt also will disqualify an older borrower from eligibility for a federally- insured reverse mortgage.

“Families need to know the costs and understand the long-term burden of having to repay large amounts of student loan debt,” Connell concluded. “They also need information regarding the value of education, hiring rates for program graduates and the likely earnings they may expect.”

Finally, Sandy Baum, senior fellow with the Urban Institute, warns people to think before they borrow. “They should borrow federal loans, not private loans, she says, recommending that if their payments are more than they can afford, they should enroll in income-based repayment.

Addressing student loan debt issues identified by the GAO report, Baum suggests that Congress might ease the restrictions on discharging student loans in bankruptcy, and end garnishment of Social Security payment for student debt. Lawmakers could also strengthen income-based repayment, making sure that they don’t give huge benefits to people with graduate student debt and relatively high incomes.

Herb Weiss, LRI ’12, is a Pawtucket writer who covers aging, health care and medical issues. He can be reached at hweissri@aol.com.

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GAO Study Reports New Trends Push Older Women into Poverty

Published in Pawtucket Times, March 7, 2014

Following on the heels of a Government Accountability Office (GAO) report released last week on March 5, the U.S. Senate Special Committee on Aging held a hearing to put a Congressional spotlight on the alarming increase of older Americans becoming impoverished.  The GAO policy analysts concluded that a growing number of the nation’s elderly, especially women and minorities, could fall into poverty due to lower incomes associated with declining marriage rates and the higher living expenses that individuals bear.

As many as 48 percent of older Americans live in or on the edge of poverty. “While many gains have been made over the years to reduce poverty, too many seniors still can’t afford basic necessities such as food, shelter and medicines,” said Aging Committee Chairman Bill Nelson (D-FL).

Senate Aging Committee Looks at Income Security for Elders

Policy experts told Senate lawmakers on Wednesday that millions of seniors have been spared from abject poverty thanks to federal programs such as Social Security, Medicaid, Medicare, SSI, and food stamps.  The testimony contrasted with the picture painted by House Budget Committee Chairman Paul Ryan (R-WI) earlier this week, who produced a report that labeled the federal government’s five-decade long war on poverty a failure.

Appearing before the U.S. Senate Special Committee on Aging, Patricia Neuman, a senior vice president at the Henry J. Kaiser Family Foundation, stressed the importance of federal anti-poverty programs.

“Between 1966 and 2011, the share of seniors living in poverty fell from more than 28 percent to about 9 percent, with the steepest drop occurring in the decade immediately following the start of the Medicare program,” said Neuman.  “The introduction of Medicare, coupled with Social Security, played a key role in lifting seniors out of poverty.”

Neuman’s remarks were echoed by Joan Entmacher of the National Women’s Law              Center, who credited food stamps, unemployment insurance and Meals on Wheels, along with Social Security, for dramatically reducing poverty among seniors.  The report was highly critical of many programs designed to help the poor and elderly saying they contribute to the “poverty trap.”  Ryan and other House lawmakers have long proposed capping federal spending and turning Medicaid, food stamps and a host of other programs for the poor into state block grants.

Older Women and Pension Benefits

GAO’s Barbara Bovbjerg also brought her views to the Senate Select Committee on Aging hearing. Bovbjerg, Managing Director of Education, Workforce, and Income Security Issues, testified that the trends in marriage, work, and pension benefits have impacted the retirement incomes of older Americans.

Over the last five decades the composition of the American household has changed dramatically, stated Bovbjerg, noting that the proportion of unmarried individuals has increased steadily as couples have chosen to marry at ever-later ages and as divorce rates have risen.  “This is important because Social Security is not only available to workers but also to spouses and survivors.  The decline in marriage and the concomitant rise in single parenthood have been more pronounced among low-income, less educated individuals and some minorities,” she says.

As marriage and workforce patterns changed, so has the nation’s retirement system, adds Bovbjerg.  Since 1990, employers have increasingly turned away from traditional defined benefit pensions to defined contribution plans, such as 401(k)s, she says, this ultimately shifting risk to individual employees and making it more likely they will receive lump sum benefits rather than annuities.

These trends have affected retirement incomes, especially for women and minorities, says Bovbjerg, that is fewer women today receive Social Security spousal and survivor benefits than in the past; most qualify for benefits on their own work history. While this shift may be positive, especially for those women with higher incomes, unmarried elderly women with low levels of lifetime earnings are expected to get less from Social Security than any other demographic group.

According to Bovbjerg, these trends have also affected household savings Married households are more likely to have retirement savings, but the majority of single-headed households have none. Obviously, single parents in particular tend to have fewer resources available to save for retirement during their working years.  With Defined Contribution pension plans becoming the norm for most, and with significant numbers not having these benefits, older Americans may well have to rely increasingly on Social Security as their primary or perhaps only source of retirement income.

Inside the Ocean State

Although the GAO report findings acknowledge a gender-based wage gap that pushes older woman into poverty, Maureen Maigret, policy consultant for the Senior Agenda Coalition of Rhode Island and Coordinator of the Rhode Island Older Woman’s Policy Group, observes that this inequity has been around since the 1970s when she chaired a legislative commission studying pay equity. “Progress in closing the gender wage gap has stagnated since 2000 with the wage ratio hovering around 76.5 percent”, she says.

GAO’s recent findings on gender based differences in poverty rates are consistent with what Maigret found researching the issue for the Women’s Fund of Rhode Island in 2010.  She found that some of the differences in the Ocean State can be attributed to the fact that older women are far less likely to be married than older men.  Almost three times as many older women are widowed when compared to men.

Maigret says that her research revealed that older women in Rhode Island are also less likely to live in family households and almost twice as likely as older men to live alone. Of those older women living alone or with non family members an estimated one out of five was living in poverty. For Rhode Island older women in non-family households living alone, estimated median income in 2009 was 85% that of male non-family householders living alone ($18,375 vs. $21,540).

Finally, Maigret’s report findings indicate that around 11.3 percent of older Rhode Island women were living below the federal poverty level as compared to 7.3 percent of older men in the state. Older women’s average Social Security benefit was almost 30 percent less than that of older men and their earnings were only 58 percent that of older men’s earnings.

             There is no getting around peoples’ fears about outliving their savings becoming a reality if they live long enough,” said AARP Rhode Island State Director Kathleen Connell. “One thing that the latest statistics reveals [including the GAO report] is the critical role Social Security plays when it comes to the ability of many seniors to meet monthly expenses. Social Security keeps about 38 percent of  Rhode Islanders age 65 and older out of poverty, according to a new study from the AARP Public Policy Institute.”

“Nationally, figures jump off the page,” Connell added. “Without Social Security benefits, 44.4 percent of elderly Americans would have incomes below the official poverty line; all else being equal; with Social Security benefits, only 9.1 percent do, she says, noting that these benefits lift 15.3 million elderly Americans — including 9.0 million women — above the poverty line.”

“Just over 50 percent of Rhode Islanders age 65 and older rely on Social Security for at least half of their family income—and nearly 24 percent rely on Social Security for 90 percent of their family income” states Connell.

             “Seniors trying to meet the increasing cost of utilities, prescription drugs and groceries would be desperate without monthly Social Security benefits they worked hard for and planned on. As buying power decreases, protecting Social Security becomes more important than ever. Older people know this; younger people should be aware of it and become more active in saving for retirement. Members of Congress need to remain aware of this as well,” adds Connell.

Kate Brewster, Executive Director of Rhode Island’s The Economic Progress Institute, agrees with Maigret that older women in Rhode Island are already at greater risk of poverty and economic security than older men.   “This [GAO] report highlights several trends that make it increasingly important to improve women’s earnings today so that they are economically secure in retirement.  Among the “policy to-do list” is shrinking the wage gap, eliminating occupational segregation, and raising the minimum wage. State and federal proposals to increase the minimum wage to $10.10 would benefit more women than men, demonstrating the importance of this debate to women’s economic security today and tomorrow.”

House Speaker Gordon Fox is proud that the General Assembly in the last two legislation sessions voted to raise minimum wage to its current level of $8 per hour.  That puts Rhode Island at the same level as neighboring Massachusetts, and we far surpass the federal minimum wage of $7.25, he said.  He says he will carefully consider legislation that has been introduced to once again boost the minimum wage.

“Bridging this gap is not only the right thing to do to ensure that women are on the same financial footing as men, but it also makes economic sense”, says Rep. David N. Cicilline.  At the federal level, the  Democratic Congressman has supported the ‘When Women Succeed, America Succeeds’ economic agenda that would address issues like the minimum wage, paycheck fairness, and access to quality and affordable child care. “Tackling these issues is a step toward helping women save and earn a secure retirement, but we also have to ensure individuals have a safety net so they can live with dignity in their retirement years,” says Cicilline.

With Republican Congressman Ryan in a GOP-controlled House, captured by the Tea Party, leading the charge to dismantle the federal government’s 50 year war on poverty, the casualties of this ideological skirmish if he succeeds will be America’s seniors.  Cutting the safety net that these programs created will make economic insecurity in your older years a very common occurrence.

.             Herb Weiss, LRI ’12, is a Pawtucket writer who covers aging, health care and medical issues.  He can be contacted at hweissri@aol.com.

AARP Rhode Island Web Report Puts Spotlight on Hunger

Published December 28, 2012, Pawtucket Times

Especially during the holiday festivities this week the plight of Rhode Island’s hungry seniors in Providence’s West End Community and throughout the Ocean State, may have remained hidden to many Rhode Islanders, especially at Christmas Dinner, who gathered with families and friends to eat turkey, ham, the fixings, topped off with delicious pastries, and even pies.

But with the funding support of AARP Foundation’s Drive to End Hunger, AARP Rhode Island officially launches its Hungry in the West End investigative web report next week, to ratchet up the public’s awareness that seniors do go hungry every day in this Providence neighborhood and throughout Rhode Island’s 39 Cities and Towns.

Executive Director, Kathleen S. Connell, of AARP Rhode Island, notes that, according the USDA statistics, 67,000 Rhode Island households are considered “food insecure,” which means families do not always have the financial ability to purchase adequate food. “Nearly a quarter (24 percent) of Rhode Island households,” she adds, “receive SNAP (Food Stamp) benefits.

Targeting the West End of Providence

According to Connell, the West End of Providence is the city’s — and the state’s – most economically challenged community. The unemployment rate among its largely Hispanic population exceeds 20 percent, more than double the state average, she says.

Connell adds that hidden in the West End are the “elderly hungry,” whose “food insecurity” is reflected in the number of people who must rely on the federal SNAP program, Meals on Wheels, congregate meals sites at senior centers and neighborhood food pantries to eat.

To get the story out about Senior hunger, former journalist and now AARP Rhode Island’s Director of Communications, John Martin, worked closely with former Providence Journal reporter, Jody McPhillips to investigate and put this issue on the radar screen of the general public as well as the Rhode Island General Assembly and state policy makers.

One disturbing fact came to light during Martin and McPhillips’ interviews, is that resources to relieve hunger are “stretched thin. Federal and state funding to end hunger have not kept pace with the problem. For instance, the Rhode Island General Assembly funding for Meals on Wheels is below funding levels of four years ago, before the nation’s worst recession began.

The Web-based reports, to premiere on Friday, January 4, 2013 at http://www.aarp.org/ri, clearly showcase this daunting domestic issue. What you will see are McPhillips’s eight separate stories, added one per day, many parts of which are supplemented by links to Martin’s videos. They range from extended interviews with McPhillips’s sources, to vignettes shot on various locations, including at the Rhode Island Food Bank, with a Meals on Wheels driver, at food pantries and senior centers, and at the Sodexo family food weekend backpacks program. Also, Martin has put together an overarching video in documentary form that will be posted on the site in segments ranging from four to five minutes each.

Before next week’s premiere you can watch a video preview of this project at – the Web site listed above.

Hunger, One of America’s Biggest Domestic Issues

Connell says that “Hunger and goes hand in hand with a host of serious health consequences – including diabetes, depression, even malnutrition. These are big issues that America faces today. It’s not just a ‘senior problem,’ it’s a societal problem, too. As someone has posted on our Facebook page, senior hunger is simply a disgrace.

“One of our conclusions [noted in the Web-based reports] is that that a lot is being done to help address senior hunger. But federal and state money is not a one-sized fits all solution. For the truly isolated seniors – especially those with disabilities and health issues — well-stocked food pantries may not be a practical resource,” noted Connell.

“We think people who read and watch Hungry in the West End will reach their own conclusions about how we tackle this on a one-to-one basis. It’s a call to action for people to be more aware of senior hunger and to reach out personally to those who might need help,” says Connell.

Connell asks: “Is there someone you can check on? Can you offer someone a ride to the supermarket when you go shopping? Or offer to pick something up? Can you visit a food pantry on their behalf? Perhaps you can ask if they would like some help in signing up for Meals on Wheels or applying for SNAP.”

Connell even knows of a group in one Rhode Island community where “volunteering” means preparing an extra meal each week for someone in need.

For AARP Rhode Island’s John Martin, “I can only say it has been a privilege to become better educated about senior hunger in Rhode Island. Jody and I met scores of people making a difference. But we also saw the great need that is out there. Each step of the way, however, we kept questioning who we were missing. The sad fact is that isolated seniors – by definition – can be all but invisible. In fact, one person said that first contact with some hungry and suffering seniors is a response to a 911 call.

“A lot of talk about hunger is focused on people out of work who are trying to feed their families,” says Martin. But this project brings the issue of senior hunger to the forefront — a problem that may not change much even if the economy makes a healthy rebound, he believes.

Martin states, “It’s not as if a stronger economy means isolated seniors on fixed incomes are going to have more money to spend on utilities, prescription medicines and groceries. And it has always been true that when seniors are forced to choose among those three expenses, groceries likely will be last on the list.”

A Preview….

Aptly put, the problem seems simple but not the solutions, so says McPhillips in her first Web report.

Luz Navarro, a diabetic with part of her left foot amputated, has been on dialysis for four years. The 62-year-old former insurance agent is now housebound, living with her cat. The independently-minded Navarro, can barely stand to cook at the stove and must now rely on Meals on Wheels, delivering her lunch five times a week.

McPhillips illustrates how difficult it is for older person’s to get enough to eat. Navarro, like many of the State’s elderly who are homebound, can’t drive to get to the market, or to a food pantry when money is tight. Nor can she walk to a Senior Center to have lunch and socialize with others.

As McPhillips quipps, “while pundits debate,” Mrs. Navarro needs to eat. While some in Congress denounce the social safety net for creating a culture of dependency, others call for funding to provide food for the needy even with a huge federal deficit.

Senior Senator Jack Reed (D-RI) makes an appearance, calling for the continuation of funding to the state’s SNAP program to feed the growing number of hungry.

Also, Catherine Taylor, director of the state Division of Elderly Affairs, says she sees a future looking darker rather than brighter, for Navarro, and other homebound seniors.

In an era of shrinking budgets, it’s becoming harder to do the things necessary to help older people stay in their homes for as long as possible, admits Taylor.

She warns that federal funding for food programs may be slashed as Congress is forced to rein in the nation’s huge deficit. Food and gas price increases will hit older person’s where it hurts, in their pocket books, predicts Taylor, making it more difficult for them to purchase groceries.

Hopefully, House Speaker Gordon Fox and Senate President M. Teresa Paiva Weed, will get Taylor’s message at the conclusion of McPhillips’ fine investigative piece: “It’s up to us to picture the world we want to age in,” and to work to bring it about.”

Herb Weiss, LRI ’12 is a Pawtucket-based freelance who covers aging, health care and medical issues. He can be reached at hweissri@aol.com.