The Social Security Administration (SSA) has recently undergone a series of operational changes and budgetary cuts as the agency transitions under new leadership. Among the most significant developments has been the reintroduction of aggressive cost-saving strategies, including controversial restructuring initiatives aimed at reducing federal spending.
A notable change is the influence of the newly established Department of Government Efficiency (DOGE), whose directive is to streamline federal agencies and cut costs. While the creation of DOGE was intended to improve operational efficiency, its impact has triggered a chain reaction of unintended consequences.
Student Loan Borrowers Now Affected
As new policy changes continue to roll out, Social Security recipients with outstanding student loans are among the latest to be impacted. Beginning in June 2025, Social Security beneficiaries who are behind on their federal student loan payments may see their monthly checks reduced by up to 15%, following a recent announcement from the Trump Administration.
Treasury Offset Program (TOP) Resumes
The primary enforcement mechanism for this reduction is the reinstatement of the Treasury Offset Program (TOP), a federal debt collection tool that allows the government to withhold funds from federal payments—including tax refunds, wages, and Social Security benefits—until a debtor’s balance is cleared.
TOP was suspended in March 2020 due to the COVID-19 pandemic and remained inactive for defaulted student loan borrowers throughout the Biden Administration. The Trump Administration, however, has now officially reactivated it.
What This Means for Borrowers in Default
TOP authorizes the Department of the Treasury to withhold up to 15% of a borrower’s monthly Social Security benefit if they are in default on a federal student loan. Importantly, benefits cannot be reduced below $750 per month, offering a limited safeguard for low-income recipients.
In a May 5 statement, the Department of Education (DOE) confirmed that approximately 195,000 borrowers have already started receiving 30-day notices warning them of pending garnishments. These notices mark the start of the reinstated collection process, which will begin affecting Social Security checks as early as June 30, 2025—once the 30-day notice period has elapsed.
The DOE also announced that by the end of the summer, all 5.3 million borrowers in default will have received similar notices, informing them that their federal payments may be subject to wage garnishment or other recovery actions.
Older Americans Particularly at Risk
This policy shift is expected to significantly impact older Americans. According to DOE data, as of early 2025, about 2.9 million individuals aged 62 and older still owe federal student loans. An estimated 452,000 of these borrowers are in default and are at high risk of seeing their Social Security benefits garnished through the TOP process.
A January report by the Consumer Financial Protection Bureau (CFPB) warned that this type of aggressive debt collection “can push older borrowers into poverty, undermining the purpose of the Social Security program.”
Affected Borrowers May Have Options
For those receiving TOP notices, some relief options are available:
- Hardship Exemption Requests – Borrowers can contest the garnishment if they can demonstrate financial hardship.
- Loan Discharge Applications – Those who qualify may be able to discharge their loans entirely.
- Rehabilitation Programs – Allow borrowers to remove loans from default by making a series of agreed-upon payments.
- Income-Driven Repayment Plans (IDR) – These programs can significantly reduce or pause monthly payments based on a borrower’s income.
- Fresh Start Initiative – A temporary federal program launched post-COVID to help defaulted borrowers re-enter good standing and halt collections.
According to CNBC, any borrower receiving a TOP notice should also receive information on how to challenge the action and request relief if they are experiencing hardship or have a discharge pending.