In the words of CNBC “Sen. Bernie Sanders, I-Vt., is pitching a new bill to stop seniors from having money withheld from their Social Security checks due to unpaid federal student loan debt.”
In a development that will come as a surprise to absolutely no one on planet earth, the so-called Stop Social Security Garnishment Act , is backed by Senators Elizabeth Warren and Ed Markey, both of Massachusetts.
Senator Sanders went on to showcase his customary display of ignorance when he said.“In the richest country in the history of the world, no senior should have their Social Security payments taken away from them to pay back student debt”. He continued “This is especially true when seniors throughout the country already cannot afford the skyrocketing price of healthcare, prescription drugs, groceries and housing.”
Where to begin.
It may be useful to note that prices are “skyrocketing” precisely because Senator Sanders and his ilk insist on handing out freebies –like student loans that don’t have to be paid back.
A few numbers are in order here. About 9.5 million people are in default on their student loans. That is roughly 20% of the total number of borrowers. Of the $1.7 trillion in government backed student loans nationwide, something on the order of $230 billion is in default.
By way of comparison the peak percentage of delinquent /defaulted mortgage borrowers in the 2008 –2012 time frame was about 10%. That is only about half as many as student loan defaulters.
It turns out that there are plenty of “student loan” borrowers are older than the typical college student. Way older. Something in the neighborhood of 9.6 million student loan borrowers who have over $450 billion in outstanding loans are over 50 years old. In 2004 the amount of student loans held by people over 60 was about $6 billion or 1.9%. By 2022 it exploded to $135 billion or 8.5%.
In 1956 the name of the original Social Security program (technically Federal Old-Age Benefits) was changed to “Old-Age, Survivors, and Disability Insurance (OASDI)” which is what it is still called today. From this we can reasonably conclude that Senator Sanders and Company want the Social Security program to be on the hook for student loan defaults. By seniors.
The typical college freshman is about 18 or 19 years old. So Senator Sanders is proposing that taxpayers foot the bill for student loans for senior citizens. And to be clear about it, run-of-the-mill Social Security retirement benefits start at 65 years of age. Now it is entirely possible that Social Security defaulters on student loans actually co-signed the loan documents on behalf of their children or grandchildren. That just means that they rented out their credit ratings and now, if Senator Sanders gets his way, the borrowers will get to walk away from their obligations.
And oh yes, we already have a $2 trillion (with a T) annual budget deficit, slated to go higher; accumulated debt of about $40 trillion (again with a T) not to mention that the Social Security Trust fund is due to run out of cash by late 2032. And that doesn’t count all the unfunded mandates.
So start your engines and just spend away.
JFB
