There is a growing concern for older Americans regarding garnishment of Social Security benefits. According to the latest data, up to 452,000 retirees aged 62 or older, with defaulted student loans could lose up to 15% of their Social Security benefits if the Trump administration resumes collections on overdue federal student debt.
The collection of defaulted student debt had been suspended during the COVID-19 pandemic and continued to be on pause under President Biden. However, recent policy changes suggest that this hold may not last much longer.
Seniors living on fixed incomes could face real financial stress if their benefits were garnished. Considering that some depend on Social Security benefits as their main or only source of income, the 15% reduction would leave them unable to afford basic living needs.
Why Are Social Security Payments at Risk?
The federal government has the authority to cut Social Security checks to collect defaulted federal student loans.
In May 2025, the Trump administration announced plans to resume these involuntary collections that had been paused since 2020. However, this decision was reversed in June, and the Department of Education announced a pause on any future cuts. Retirees are still in a state of uncertainty since the pause is not guaranteed to be permanent.
Who Could Be Affected?
15% garnishments would have significant effects on 450,000 borrowers who are currently in default out of 1.3 million retirees who have student loan debt. About 37% of all retirees with student loan debts rely on Social Security for 90% of their income. For this group of retirees, a modest deduction of their income could have devastating effects.
How Much Could Be Garnished?
Considering that the average Social Security monthly benefit is $1,523, most would lose around $115 per month if the government withheld 15% of monthly Social Security payments.
Although this may not seem significant, it can make all the difference between meeting basic needs and struggling for low-income seniors.
Garnishment Pause May Be Temporary. Prepare Now
While the plan has been paused by the Department of Education, government experts say that the garnishments are still real and may be reintroduced. Mark Kantrowitz, a higher education specialist, warns that retirees should not assume the pause will last and should take steps now to avoid garnishment if they’re in default.
What You Can Do to Protect Your Social Security Benefits
If you are worried that losing a portion of your Social Security for defaulting student loan debt might plunge you into financial stress, here are options you could try out:
1. File for Financial Hardship
You may be able to reduce or halt the reduction of your monthly checks if you:
- Have ongoing medical expenses
- Care for dependents
- Live at or below the poverty line
When applying, you will have to submit proof to the U.S. Treasury Department or its debt collection agency.
2. Rehabilitate or Consolidate Your Loans
Loan rehabilitation involves making nine affordable payments to return your loan to good standing. Consolidation may also be an option, combining your defaulted loan into a new one with better repayment terms.
Conclusion
The possibility of Social Security being cut by up to 15% is still a concern for over 450,000 older Americans who have student loan debts. Although the process is currently paused, retirees should prepare for the resumption of the recovery process at any time.
Taking action now can help protect your income and give you greater financial peace of mind in retirement.