There are hidden costs, even when the government is able to collect the money.
One of the department’s most successful — and draconian — collection mechanisms is the Treasury’s offset program, which seizes government payments. In 2019, the Treasury Department seized nearly $4.9 billion in tax refunds and other payments to pay off student loan debt, according to an analysis of Treasury data by the Seldin/Haring-Smith Foundation. . The biggest chunk, nearly $1.7 billion, came in February – the prime filing time for people collecting the Earned Income Tax Credit, a support measure for low-income families and medium.
“The social safety net is meant to protect people from crushing poverty,” said Abigail Seldin, the foundation’s chief executive. “It is not intended to reconcile public debts.”
Many faults, especially those that have lasted for decades, involve murky situations that can be nearly impossible to unravel. Walter Jones, 65, was not even aware he had an overdue loan until the government confiscated part of the Social Security survivor benefits he applied for in 2018 after the death of his wife.
When his first checks arrived, Mr Jones discovered that $134 of his monthly payment of $891 was being held back to pay off a $4,000 debt for a program at Sutton Business School, which closed decades ago. He had never heard of the school and insisted he had never attended it.
In the late 1980s, when the loan was taken out, Mr. Jones was in a vocational training program and filling out a mountain of paperwork. His lawyer, Mr Tyler, suspects someone faked or tampered with the loan application – a tactic many for-profit schools have been busted for. Mr. Tyler filed two claims challenging the validity of the debt; the government denied both.
Mr Jones, an army veteran who spent 30 years as a school bus driver but stopped working during the pandemic, finally got some breathing room when the payment freeze halted the seizure of his cheques. He hopes Mr Biden will follow through on his campaign promise to eliminate $10,000 in debt per borrower. It would save Mr Jones the work of further contesting his debt or enrolling in an income-driven scheme, which would require him to recertify his income every year for two decades.
“I don’t want to have to deal with it,” he said. “It’s depressing. Exhausting too – very, very exhausting.