If 69-year-old Lynda Sue Costley wants to shower, she has to go to a friend’s house. Her trailer, on a gravelly road outside Amarillo, hasn’t had running water since 2014 — when her husband died from cancer. She spent the little savings she had on his medical care, she said, and hasn’t repaired the burst pipe.

Costley works part time at a food bank, making $7.25 an hour, and said she stretches every dollar she has. But every month, she receives a letter in the mail saying the federal government is withholding $134 from her Social Security checks — the equivalent of 18 hours of work.

Like death and taxes, Costley may be facing another certainty in life: her student loans.

Although she attended college decades ago and made payments when she could, Costley’s debt has gone into default, swollen with accrued interest and been turned over to a collection company. She’s had her wages garnished and her income tax refunds withheld. Nearing 70, she still owes nearly $12,000 for classes she attended in the 1980s and 1990s — and her balance continues to be padded by interest and the debt collector’s costs.

“I know I’ve got to pay it back; it needs to be paid back,” said Costley. “When I have the money, I will.”

She’s not alone.

Typically associated with millennials, the specter of student loan debt hangs over potentially thousands of retirement-age Texans, like Costley. Older Americans — ages 65 and over — were the fastest-growing demographic of student loan holders, according to a government report from 2016, and the most likely to be in default.

Some returned to school midway through their careers. Others took out loans for their children.

Although the increasing cost of college has led Americans to carry more student debt than before, older borrowers may have been particularly affected by changes to loan terms. Unlike students, parents face no lifetime limit on how much they can take out in federal loans, and private lenders, like banks, have increasingly required that a student’s loans be co-signed by someone with good credit. The result: Older adults are not just paying off loans for themselves, but may be drowning under debt they’re carrying for their children.

More flexible repayment options, like income-based plans, also were not available to federal student loan holders before the 1990s. Costley falls into that category.

She got a drafting degree from Amarillo College in the 1980s and returned a decade later to learn AutoCAD, a design software for architects. She dropped out.

Costley didn’t enter the field she studied — she blamed an oil slump for a lack of jobs — but she’s worked virtually all her adult life, at Walmart and Office Depot, at food establishments and hotels. She married and divorced twice before meeting Jerry, a farmer 12 years her senior, and still lives in the white trailer they shared. Money was always tight, but “we had each other,” she says now. “It was enough.”

It wasn’t until he died that the letters started coming, Costley said. First it was notice that her federal tax refund would be used to pay down her student loan debt. Then it was letters saying $134 had been withheld from her monthly Social Security payment, leaving her with about $760.

She’s not the only one in this situation: 173,000 people in the United States had part of their Social Security retirement, survivor or disability benefits withheld in 2015 — 38,249 of them 65 and older, according to a report authored by the nonpartisan Government Accountability Office. For many, the withholdings went to paying off interest or fees and not to reducing the principal of the loans.

Records show Costley paid at least $1,600 in interest and more than $550 in government fees between April 2017 and September 2019. About 30% of the amount withheld from her Social Security checks or wages during that time went to interest and 10% to fees. A recent statement Costley received from her debt collector shows she owed $1,817 in collection costs and $40 in interest as of late September, and the amounts continually build.

An Education Department spokesperson said a 1996 debt collection act requires the agency to refer defaulted student loans for "offset," the practice of diverting Social Security payments or tax refunds to repay government debts. The department will first give borrowers a 65-day warning and tell them they can avoid offset by entering into a "reasonable and affordable" repayment plan or proving that their debt is unenforceable.

Costley’s debt collection company did not respond to requests for comment.

Compelled collection

Borrowers may be beckoned by the prospect of economic advancement. But student loans can have a devastating effect on those who default — destroying their credit or landing them in the crosshairs of a debt collector or in court. It can even threaten their housing.

Joanna Darcus, an attorney for the National Consumer Law Center, said homeowners subject to Social Security offsets may be unable to modify their mortgages — a process that can forestall eviction or foreclosure — due to the loss of income. She said she’s also seen bad credit from student loans hurt borrowers’ prospects for getting affordable or subsidized senior housing.“The federal government's powers to collect student loan debt are very strong,” Darcus said, “stronger than the powers that the government has or employs to collect other types of government debt.”

The government can withhold federal income tax refunds and garnish up to 15% of a borrower’s take-home pay or Social Security benefits. The benefits cannot drop below $750 a month, a threshold set in the 1990s that is now below the federal poverty level. Fees are also charged each time a tax refund or Social Security check is offset.

Legislation has been introduced in Congress to eliminate Social Security offsets for student loan debt or to tie the amount withheld to inflation. Those bills have not passed — and this year, student loan advocates and lawyers say they noticed an uptick in how aggressively the government is going after debtors’ social security benefits.

Americans hold some $1.5 trillion worth of college debt, most concentrated in the hands of those under 50 years old. But the ranks of older borrowers, 60 and older, swelled from 700,000 in 2005 to 2.8 million people in 2018, and their debt load went from $8.2 billion to $66.7 billion, an eightfold increase, according to data from the Federal Reserve Bank of New York Consumer Credit Panel and Equifax.

In 2017, about 222,144 Texans ages 60 and over had student loan debt, carrying a median load of $15,754, per a Consumer Financial Protection Bureau report. Eighteen percent of them were delinquent that year — but it’s unclear how many went into default or had their Social Security benefits withheld. Government data shows the Education Department referred 10,813,852 debtors to the Treasury Department during the last decade, but it doesn't specify if those people ultimately had payments garnished.

The nonprofit Trellis Company, which was the state’s guarantor for a federal loan program that ended in 2010, declined to provide statistics about how many older borrowers were in its portfolio or the number of them in default. A spokesperson, Bryan Gilbert, explained the organization’s data would not be helpful — and could actually be misleading — given the small size of its loan portfolio relative to the number of retirement-age borrowers in Texas and across the country.

“It just keeps building"

There are ways to have federal student loan debt wiped away. A borrower can submit documentation that shows he or she is “totally and permanently disabled” and request a discharge. The Education Department has steered borrowers receiving Social Security disability benefits to this option since 2016, and in August, President Donald Trump signed an executive order automatically forgiving the debt of permanently disabled veterans.

The Education Department spokesperson said the agency redesigned its processes related to offset last year — to "fully comply" with the 1996 debt collection act — and that led to a significant increase in the number of borrowers subject to the withholdings. But that avenue isn’t available to able-bodied borrowers, like Costley. Even bankruptcy — which can erase credit card and medical debt — is unlikely to provide a financial life raft for her; the bar to discharge student loans is far higher than that needed for consumer debt.

“It doesn’t compare,” said bankruptcy attorney Steven Palmer. “This is the one main type of consumer debt that ... you just can’t get out of." Taxes, medical debt, mortgages, government-backed Small Business Administration loans can all be discharged. "It’s pretty much absolutely everything except student loans," he said.

It’s particularly difficult in Texas. In the Fifth Circuit, which considers cases from federal courts in Texas, debtors would virtually need to show total incapacity to get relief. As recently as July, a court rejected an appeal from a Texan over age 60 with a degenerative nerve condition and nearly $8,000 in student loan debt. Other courts — including those overseeing Massachusetts and Maine — have used a more charitable interpretation of the federal statute, which says student debt can be discharged if repayment imposes an “undue hardship.”

“Today you can file a bankruptcy, be in just utter, destitute circumstances and still fail” the test required to discharge student loans, said Palmer, an attorney at the Curtis, Casteel and Palmer law group in Washington.

Sapna Aiyer, an attorney with Lone Star Legal Aid, also said it's exceptionally hard to meet the Fifth Circuit's undue hardship test.

"The only cases I’ve seen where that standard actually passes is where the debtor is just going to get sicker and sicker, like [with] Parkinson’s or cancer," Aiyer said.

Legislation filed in Congress would make it easier to discharge student debt in bankruptcy, but it hasn’t progressed.

Student loan holders can also apply for hardship waivers that can reduce how much of their Social Security benefits are withheld or stop the payments from being offset altogether.

Costley hadn’t heard about the hardship waiver and has entered into a payment plan with her debt collector. She said she’s responsible for her loans and doesn’t mind the government taking her tax refunds and Social Security benefits to pay them back.

The government has recouped some $5,000 from Costley since April 2017, largely through garnishing her wages and withholding her income taxes and Social Security pay. It’s hard to determine how much Costley has paid in total; records show she consolidated her loans, but she doesn’t remember doing so and didn’t retain documentation about the original amount she took out. A March 1996 document, signed as she returned to college, shows she had a loan balance of $7,168.

At one point in the mid-1980s, Costley said she was close to paying the debt off in full. But instead, she replaced her car — she said it kept dying, including once in the middle of an intersection while her son was in the front seat.

“I was dumb,” she says now, reflecting on the decision. “I should have paid my loan off — but then I wouldn’t have been able to [get to] work.”

Asked what advice she would give to college students today, Costley said, “Stick with those payments and get it paid off as quick as you can. All it’s going to do is keep building.

“It seems like the more you pay, it just keeps building,” she said.But Costley does puzzle over why her loan balance is so high, given the years of garnishments and sporadic payments. “I really thought I would have paid more of it,” she said.