iStockphoto/Thinkstock

Consumers struggling with onerous student loan payments in a tight economy may be in for some bad news: Those loans never go away, and even Social Security checks can be garnished to pay them back.

According to a report by Smartmoney.com, between January and Aug. 6, about 115,000 people had their retirement checks reduced to pay off federal student loans. Up to 15 percent of the payment can be withheld, or $185 from the average Social Security check of $1,234.

Social Security might be far from traditional students’ minds when they take out loans to pay for college in their late teens and early twenties. However, reality is setting in for older Americans who borrowed money to go back to school, or for parents or grandparents who signed off on a loan for their dependents.

The fact that Social Security is even in play brings clarity to the unique nature of student debt. “There are two parts to that issue,” says Seth A. Rosenberg, a bankruptcy attorney in Seattle. “On the one hand, Social Security is generally not garnishable, and for good reason. It’s meant as the safety net for elderly and disabled people.”

Federal laws that allow the government to garnish Social Security to collect student loans, and do so without time limit, were upheld by a 2005 Supreme Court decision.

“On the other hand,” Rosenberg says, “you have students loans, which are one of the few debts you have that aren’t dischargeable in bankruptcy.

“The fact is, this really can cripple someone on a limited income,” says the lawyer. Worse, it’s not just retirement checks that are in danger: SSI, or Social Security for people with disabilities, can also be garnished. If a young person gets injured shortly after school and can no longer work, his or her SSI could be cut to pay for loans that aren’t even doing any good at that point.

One Trillion Dollars

Seth A. Rosenberg

The big takeaway for people considering applying for loans is that they really do stay with you forever, until they’re paid off or you die. The upside is that the education afforded by the loans should help consumers earn more money and contribute more productively to society, but in a lousy economy the costs and benefits of the loans should be weighed very carefully.

Plenty of people call him trying to ditch their loans through bankruptcy, Rosenberg says, only to be disappointed. “There’s really not a solution for them,” he says. “That loan rolls after them no matter what their circumstances are. If you become unemployed it’s still there, it just gets deferred for a period of time. In retirement, disability, no matter what your circumstances are, this is one debt that exists no matter what.”

The problem could become worse for today’s students, who hit the streets with record loans only to find themselves mired in a continually dismal job market. In 2010, the average student graduated with $25,250 in debt, and the total student debt in the nation currently exceeds $1 trillion dollars, more than the total credit card debt.

As college tuitions continue to rise above the rate of inflation and most jobs require a diploma, the youth of today are left in an unenviable position. “People are essentially being preyed on,” says Rosenberg. “You need an education to get ahead. Then you’re stuck with this debt that has these unique characteristics you can never get rid of.”