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Social Security Payments Under Threat as Student Loan Garnishments Resume

Millions of older Americans relying on Social Security as their primary source of income could see a reduction in their benefits starting this June. That’s because the U.S. Department of Education has resumed garnishments on federal student loan defaulters — including those receiving retirement or disability benefits.

The move comes after a nearly five-year pause on collection activities during the pandemic. Now, the government is again pursuing overdue payments from its $1.6 trillion federal student loan portfolio, with seniors among those hardest hit.

According to a Consumer Financial Protection Bureau (CFPB) report, more than 450,000 borrowers aged 62 and older are in default on their federal student loans and are likely receiving Social Security benefits. Depending on their birth date and benefit schedule, some could notice garnished payments as early as June 3, with others affected later in the month (June 11, 18, or 25).

Why This Is Happening Now

On April 21, the Trump administration formally lifted the COVID-era freeze on federal student loan collections. That freeze had protected vulnerable populations, including retirees, from financial strain during the public health crisis.

But with the economy now moving past pandemic recovery, collections have resumed — and that means offsets on federal benefits like Social Security are back in play.

“People are panicking,” says Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York. “For many, their Social Security check is their only reliable income. Losing a chunk of that is devastating.”

What to Do If Your Social Security Check Is at Risk

1. You Should Have Received a 30-Day Warning

Borrowers in default are legally entitled to a minimum 30-day notice before garnishment begins, explains Mark Kantrowitz, a leading higher education expert. This letter includes contact information for contesting the garnishment and should be sent to the borrower's most recent address on file.

Tip: Make sure your loan servicer has your updated contact information. If you’ve moved or changed phone numbers, you may not receive critical warnings.

2. Challenge the Garnishment

If you believe you’re financially vulnerable or have a disability, you may be able to halt the garnishment altogether.

“There are hardship exemptions, especially for those facing serious health or financial struggles,” Kantrowitz notes.

Seniors with permanent disabilities can apply for a Total and Permanent Disability (TPD) Discharge, which eliminates their federal student debt entirely. You’ll need proof from a doctor, the Social Security Administration, or the Department of Veterans Affairs.

3. Get Out of Default Through Repayment Plans

Another way to prevent garnishment is to bring your loan out of default. According to Betsy Mayotte, president of The Institute of Student Loan Advisors, you can do this by enrolling in an Income-Driven Repayment (IDR) plan.

“If your only income is Social Security, your monthly student loan payment could be as low as $0,” says Mayotte. You can contact the Default Resolution Group to begin this process.

How Much Can Be Taken?

The government can garnish up to 15% of your monthly Social Security benefit, but by law, you must still be left with at least $750 per month. This applies to both retirement and disability payments.

Importantly, the 15% garnishment is calculated on your gross benefit, before any deductions like Medicare premiums.

So, for example:

• If your gross monthly Social Security is $1,200, you could lose up to $180.
• But if garnishing that amount brings you below the $750 minimum, the deduction would be adjusted accordingly.

Surviving on Less: Relief Options for Seniors

Living on a fixed income is already challenging. For those facing further reductions, there are ways to stretch your budget:

• Medical Help: Nonprofits like Copays.org offer financial assistance with premiums, medications, and copays.
• Comprehensive Aid: The National Patient Advocate Foundation has a directory to help seniors find local resources for dental, medical, and even end-of-life care.
• Food Assistance: Only about 42% of eligible seniors participate in the Supplemental Nutrition Assistance Program (SNAP), even though the maximum benefit for a one-person household is $292/month. These benefits can be used at most grocery stores and even online retailers.

Final Thoughts

The restart of student loan garnishments is a stark reminder of the financial fragility facing many older Americans. But if you're in default, you still have options — from hardship exemptions to repayment plans that reduce your payments to zero.

If you’re worried about your Social Security check being affected, act immediately. Time is critical, especially with garnishments resuming this month.

Bottom Line:
Social Security garnishments due to student loan defaults are now back in effect. If you're a retiree or disabled borrower at risk, take action today to protect your benefits.