Starting June 2025, many Social Security recipients may see their monthly benefits reduced by 15% if they are in default on federal student loans.
This marks the reinstatement of collections under the Treasury Offset Program (TOP), which had been suspended since March 2020 in response to the COVID-19 pandemic.
Why Are Social Security Payments Being Garnished?
The Trump administration confirmed that borrowers who have fallen behind on federal student loans will face benefit garnishments of up to 15%. Although this is a significant deduction, a minimum of $750 per month must be preserved for the recipient.
This policy disproportionately affects seniors and individuals with disabilities, many of whom rely entirely on Social Security for essential expenses like housing, food, and medical care.
How Many People Are Affected?
According to the Department of Education, this change could impact a large population:
| Category | Number of People Affected |
|---|---|
| Borrowers already sent collection notices | 195,000 |
| Total delinquent borrowers | 5.3 million |
| Borrowers aged 62+ with federal loans | 2.9 million |
| Borrowers aged 62+ currently in default | 452,000 |
These figures highlight the widespread consequences of this decision on older Americans and their financial security.
Collection Resumption Timeline
Following the official end of the pandemic-related pause in October 2023, the Department of Education initiated a phased approach to restart collections. June 2025 will mark the first major wave of benefit garnishments for those in default.
Advocacy organizations, including the National Consumer Law Center, have criticized the move as punitive and detrimental to economically vulnerable citizens, urging reconsideration of the policy.
Options Available to Avoid Garnishment
While the policy may be unavoidable for some, several programs offer relief to those willing to take prompt action:
- Loan Rehabilitation – A chance to bring the loan back into good standing after a series of agreed-upon payments.
- Income-Driven Repayment (IDR) Plans – Monthly payments based on income and family size.
- Fresh Start Program – Designed to allow borrowers to temporarily exit default and prevent garnishment.
- Hardship Waivers – For individuals facing extreme financial challenges.
- Loan Forgiveness – Available under certain qualifying conditions.
The Department of Education’s notices will contain detailed instructions on how to access these options and stop garnishments before they begin.
Rising Concerns for Retired Borrowers
Experts caution that the return of collections could have political and social ramifications, particularly for the growing number of seniors carrying student debt into retirement.
Many older Americans co-signed or borrowed to support children or grandchildren in college. Now, in retirement, they face severe financial strain.
With inflation and living costs climbing, a reduction in already modest Social Security payments could push vulnerable individuals further into poverty.
Authorities Urge Immediate Action
Those who could be affected are strongly encouraged to act before the end of June 2025. Exploring available relief options and contacting the appropriate agencies may help prevent benefit garnishment and avoid further financial hardship.
As of June 2025, the reinstatement of student loan collections poses a real threat to the financial stability of millions of Social Security recipients.
With 15% garnishments looming, taking immediate action can protect essential income. Seniors, especially those in default, are urged to seek relief programs and avoid deeper economic hardship.
FAQs
How much of my Social Security payment can be garnished for student loan debt?
Up to 15% of your monthly Social Security benefits can be garnished, but a minimum of $750 must be protected.
Can I stop the garnishment from happening?
Yes, by enrolling in programs like loan rehabilitation, IDR plans, or Fresh Start, you can prevent or stop garnishment.
Who is most likely to be impacted by this policy?
Seniors and people with disabilities who rely heavily on Social Security and are in default on federal student loans.