The US Department of Education plans to reinstate garnishment of Social Security benefits for certain delinquent federal student loan borrowers later this summer. The move, part of a wider debt recovery drive under the Trump administration, is expected to impact hundreds of thousands of older Americans.
The policy follows the administration’s earlier decision to resume recovering overpaid Social Security benefits at a rate of up to 50%—a significant increase from the Biden-era 10% rate. The forthcoming measure targets recipients who are in default on federal student loans, many of whom rely heavily on these payments for their daily living expenses.
Older Borrowers Face 15% Garnishment Rate
Federal student loan garnishment from Social Security benefits has been on hold since March 2020, when repayments were paused at the onset of the COVID-19 pandemic. According to the US Department of Education, roughly 42.7 million Americans currently owe $1.6 trillion in federal student loans. Among them, about 2.7 million borrowers are aged 62 or older, and 452,000 are both delinquent and receiving Social Security payments.
The Department of Education has confirmed that, once reinstated, garnishment will be set at a maximum of 15% of a borrower’s monthly benefit. However, the law requires that recipients be left with at least $750 per month. This means low-income beneficiaries receiving, for example, $800 per month would see only $50 deducted, representing a smaller proportion than the 15% cap.
According to the Consumer Financial Protection Bureau, the number of older Americans holding student loan debt rose by 59% between 2017 and 2023. This trend has intensified concerns that garnishment could push already vulnerable seniors into deeper financial hardship, particularly as many rely on Social Security as their main source of income.
Options to Avoid or Reduce Garnishment
There are two primary legal avenues available to affected Social Security recipients to avoid or limit the upcoming garnishment. The first is applying for a Total and Permanent Disability (TPD) discharge. This process, which requires medical documentation, can eliminate the obligation to repay federal student loans for those deemed unable to engage in substantial gainful activity.
The second option is to request a financial hardship exemption from the Department of Education. This requires proof that the garnishment would leave a borrower with income lower than their essential living expenses. According to the Consumer Financial Protection Bureau, around 82% of affected seniors could qualify for this exemption, but awareness of the process remains low and few apply.
While the Department of Education has delayed the start date for these offsets until later in the summer, no precise timeline has been given. For the estimated 452,000 older Americans in default, preparation and awareness of the available options may determine whether they face reduced Social Security payments in the months ahead.
If someone went to a collage, yet could not earn enough or not able to get substantial gainful activity through their working life to qualify for more than $800/month for social security then the collage failed the student and they should get their loan forgiven. If a student was continuously failing in their classes, the collage should have intervened and recommend that they transition to a more appropriate school for their skills; maybe some type of trade school. Thus the delinquent loan would be minimized or eliminated early, reducing the loss well before the loan becomes substantial.