Federal Student Loans In Default
Beware the Woodstock Effect!
More than 40 years ago, students who were attending college had a host of social, political and environmental concerns — much like today. However, student loan issues had yet to become a multi-generational problem like they are today. Some students were so involved in the issues of the day that they completely forgot about the fact that they ever took out student loans. Some never paid on them, yet they remained due.
The reminder occurred when those who attended the concert at Woodstock and were involved in the culture of that era became eligible for Social Security benefits. They had worked all their lives, paid into the system, retired, and received the letter of entitlement indicating they would be receiving benefits. The first payment had been substantially reduced with a note that said, “Remember Woodstock? The student loan? Now it is time to repay it.”
A $1,500 student loan that was taken out long ago and never repaid became a $25,000 federal debt that was being offset by a reduction in the payment of a federal benefit. OUCH! This happens — my 60 + year old clients have lived it.