From June 2025, millions of Social Security recipients could see their monthly checks reduced following federal government efforts to collect defaulted student loan debts. This plan is part of a debt recovery program that was paused during the COVID-19 pandemic.
Why Social Security Benefits are at Risk
About 2.9 million Americans aged 62 or older still hold federal student loan debts, and the number has increased since 2027, according to the U.S. Department of Education. More than 450,000 individuals are currently in default and at risk of automatic garnishment of their Social Security benefits through the Treasury Offset Program (TOP).
How The Garnishment Works
Under the Treasury Offset Program, the government is allowed to seize up to 15% of an individual’s monthly Social Security benefits to repay defaulted federal student loans. However, federal law stipulates that the garnishment cannot reduce checks below $750.
One is considered a defaulter when their loan is past due by 270 days. At that point, the debt is transferred to a collection agency, which triggers more aggressive collection methods such as garnishing wages.
The garnishment process cannot take place without a notice, but some notices could have already been sent before the pandemic, and the government is not mandated to resend them. Therefore, many defaulters may be caught off guard when their June benefits are garnished.
Who’s Behind the Restart of These Collections?
The Trump administration resumed these collections as part of a broader push to enforce long-standing federal loan rules that were paused during the pandemic. Though these recovery practices date back over two decades, they were suspended temporarily to ease the burden on struggling borrowers during the economic crisis.
What You Can Do If You’re in Default
If you’re in default, it’s important to act fast to avoid having your Social Security benefits garnished. Start by contacting your loan servicer. Some programs can help, like deferment or forbearance to temporarily pause payments, and income-driven plans that lower your monthly bill based on what you can afford. You may also be able to remove your loan from default by making nine reduced payments over ten months through rehabilitation. According to financial aid experts, borrowers should take action early, before collections begin, to access these options.
Delayed Checks Add to the Stress
To make matters worse, some Social Security payments are arriving later than usual this month, further complicating things for beneficiaries already dealing with potential garnishments. Although the delays are temporary, possible offsets plus late checks could cause financial stress for those who rely on Social Security payments as their sole source of income.
The federal government’s decision to resume student loan collections from Social Security checks is about to impact hundreds of thousands of older Americans, many of whom live on fixed incomes and may not even realize they’re at risk. With offsets starting in June, now is the time to check your loan status, explore your options, and take action to protect your benefits before it’s too late.