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Credit Repair

New Social Security Worry: College Debt Collection

There was a time when Social Security was sacrosanct. Not even the federal government would garnish any part of it to satisfy a debt. That is no longer true and the fed is hounding an ever increasing number of recipients for as much as 15% of their monthly stipend.

According to government data compiled by the Treasury Department the federal hounds are withholding money from 115,000 retirees as of August 6, 2012. That doubles the number of withholdings from last year. As recently as 2000 there were only 6 people whose checks were being garnished.

What is behind the push for funds, other than government greed and overspending? Several reasons have been cited: cosigning loans for grandchildren, going back to college later in life, and being underemployed after graduating college.

Nearly 2.2 million people over 60 still hold student loan debt. During the first quarter of 2012 approximately 10% of them were 90 days or more past due, according to the Federal Reserve Bank of New York. Since this type of debt is being pursued more heavily by the government, you must plan for a possible offset during your retirement. Unfortunately, debt collection is becoming just another obstacle to be overcome after you stop working.

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