That Federal Student Loan you Forgot to Pay Back? Yeah, the Government Didn’t Forget…

File this under little known fact…if you borrowed money from the Federal government to help pay for your higher education and you neglected to pay it back, come retirement you may be in for a painful reminder.

According to analysis done by the U.S. Treasury for CNNMoney, in 2013 156,000 Americans had their Social Security checks garnished because of student loans they had defaulted on. It's tripled in number from 47,500 in 2006, before the Great Recession.

For retirees, any cuts to their Social Security benefits really hurts. What's worse is that even if the unpaid student loan was small, the amount they owe now is usually a lot larger because of compounding interest rates. Very few student loans can be refinanced and many people have outstanding loans with interest rates locked at over 7%, even though rates have fallen in recent years to below 3%.

The amount taken from these checks isn't small. The average Social Security monthly check is $1200, the typical amount taken is $180 (works out to ~15% of your benefit, nothing to sneeze at).

Repayment terms on student loans are extremely rigid. They are rarely forgiven even in bankruptcy and people can have their wages garnished if they default.