Kim
A new wave of Social Security benefit reductions is set to begin as early as June 2025, affecting thousands of older Americans who have defaulted on federal student loans.
The Department of Education, in coordination with the Treasury Offset Program (TOP), has resumed involuntary collections, including garnishing Social Security and disability payments.
This policy shift could result in a 15% reduction to monthly Social Security checks for those in default, marking a significant financial hit—especially for retirees living on a fixed income.
Why Are Social Security Benefits Being Cut?
The government is restarting student loan collections after they were paused during the COVID-19 pandemic.
With those protections lifted in 2023, the Biden administration (formerly paused under Trump policies) has now resumed the Treasury Offset Program, which allows the government to reclaim debts from Social Security, tax refunds, and federal paychecks.
Specifically, for Social Security recipients, up to 15% of their pre-deduction benefit can be withheld to repay student loan debt.
Who Is Affected by the 15% Cut?
This move primarily targets older Americans who have:
- Federal student loans in default
- Not entered into repayment plans
- Not requested forbearance or deferment
Key Stats:
- 2.9 million Americans aged 62+ currently have outstanding federal student loans
- 450,000+ borrowers over 62 are already in default
- 195,000 borrowers are currently receiving notices of garnishment, with more to follow this summer
How the Garnishment Works
The Treasury Offset Program can reduce Social Security or Social Security Disability Insurance (SSDI) payments by up to 15%.
However, there are protection limits in place:
- Payments cannot drop below $750, even after garnishment
- The 15% deduction is based on the gross benefit, before deductions for Medicare or other adjustments
- Applies to retirement and disability benefits
Social Security Garnishment
| Benefit Type | Monthly Amount | 15% Garnishment | Final Amount (If Above $750 Minimum) |
|---|---|---|---|
| $1,200 | $180 | $1,020 | |
| $1,000 | $150 | $850 | |
| $800 | $120 | $750 (minimum) | |
| $750 or less | No garnishment | $0 |
If your post-garnishment amount would fall below $750, the government cannot take the full 15%. Garnishment would be limited to preserve the $750 minimum.
What You Can Do If You’re at Risk
The Department of Education has already started notifying affected individuals, providing a 30-day window before garnishments begin.
Steps You Can Take to Avoid Garnishment:
- Contact the Department of Education or your loan servicer immediately
- Apply for an Income-Driven Repayment (IDR) Plan or Loan Rehabilitation
- Request a hardship exemption or appeal the garnishment
- Monitor your Social Security notices for updates and respond promptly
Failing to act during the 30-day notice period may result in automatic deduction from your next Social Security check.
What Restarted the Offset Program?
During the COVID-19 pandemic, the federal government paused all involuntary student loan collections, including wage garnishments and offsets from Social Security benefits. But as of May 2025, the Treasury Offset Program (TOP) has resumed its activity, based on guidance from the Department of Education.
This shift comes after over two years of paused collections and reflects a broader push to recoup federal debts, especially student loans in long-term default.
The restart of the Treasury Offset Program signals serious implications for Social Security recipients in student loan default. With 15% of benefits at risk, many seniors could see hundreds of dollars withheld from their monthly checks starting in June 2025.
If you’re among the 195,000+ borrowers already notified, now is the time to act quickly—either by contacting your loan servicer, setting up a payment plan, or applying for hardship relief. Ignoring the notice could result in a sudden and unwelcome drop in your benefit check.
This issue underscores a growing concern: student loan debt isn’t just a young person’s problem anymore. It’s crucial for older Americans to stay informed, plan ahead, and protect the benefits they’ve earned.
FAQs
When will the 15% Social Security cuts begin?
Garnishments are set to begin in June 2025. Affected recipients should receive a 30-day notice before their benefits are reduced.
Can all Social Security benefits be garnished?
Only retirement and disability benefits are subject to garnishment. SSI (Supplemental Security Income) is exempt from garnishment.
How can I avoid having my Social Security benefits garnished?
Enter into a repayment or rehabilitation plan, apply for hardship relief, or contact your loan servicer within 30 days of receiving a notice.