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RENEE MONTAGNE, HOST:

Here on MORNING EDITION, we've been following families pulling together to finance their lives in this tough economy in a series Family Matters.

DAVID GREENE, HOST:

And families often come together to finance college education, with parents and grandparents helping foot the bill or co-sign loans, which it turns out, can have bigger implications than family members might expect.

MONTAGNE: A story in SmartMoney.com documents a new trend - the Federal government withholding money from Social Security recipients who stopped making payments on federal student loans.

One-hundred-and-fifteen-thousand recipients have seen this type of reduction in their monthly Social Security checks so far this year - almost twice as many as last year.

AnnaMaria Andriotis reported this story, and joined us from New York to talk about it.

Good morning.

ANNAMARIA ANDRIOTIS: Great to be here.

MONTAGNE: Now, just wait a minute, people on Social Security are having their checks docked for not paying student loans. How can that be? What's going on here?

ANDRIOTIS: What's going on is that this is really the only consumer loan out there that people cannot get rid of. There is no way to get rid of student loan debt. In pretty much all of these cases, these federal student loans that these retirees signed up for by themselves. There is no co-signer involved. The loans that these individuals had signed up for years ago where the Federal PLUS Loan, that is a loan for parents or other elders who are related, who said to their grandchild, who said to their child, OK, you're going to college, you need some help. Instead of saddling you with all of the debt I'm going to take on some debt as well and I'm going to sign up for the Federal PLUS Loan.

MONTAGNE: And then what? In a smaller percentage you're talking about people on Social Security, they're still paying off their own student loans.

ANDRIOTIS: Right. So in other cases you have retirees who are still dealing with their own student loan debt, the student loans they incurred to go to college decades ago - whether it was for undergraduate or graduate studies. But in most cases these loans aren't even their own loans and that's what makes this whole situation really sad.

MONTAGNE: Well, how much money are these people seeing docked from their Social Security checks on average?

ANDRIOTIS: The amount varies, but it can run up to 15 percent of each month check. So when you look at the average monthly Social Security benefit, that's about $1,200 - that means a monthly haircut of almost about $190. So it's not a small amount of money, and especially for a retiree on fixed income, this sort of situation can really derail their retirement.

MONTAGNE: Although, you know, you hear this from younger borrowers and parents a lot these days that people, they don't realize what they're getting themselves into. I mean, so this also now applies to this other generation of people who may be more vulnerable.

ANDRIOTIS: That's true. And what we're seeing is that there's roughly 2.2 million student loan debtors who are 60 years old and older and nearly 10 percent of the student loans that they're holding are at least three months behind on payments. The first time they really ever had any data on this issue was back in 2000, and in 2000 there were only six cases of individuals whose Social Security retirement benefits were being reduced. In about 12 years, we've gone from just six cases to 115,000 and counting right, 'cause this year isn't even over yet. So what we're seeing is that student loan debt in following people later on into life.

MONTAGNE: AnnaMaria Andriotis is a senior writer from SmartMoney.com. Thanks very much.

ANDRIOTIS: Thank you.

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