Nearly half a million older Americans are facing a financial hit this month, and it’s coming from an unexpected source — unpaid student loans. If you’re wondering how your Social Security check could get docked over something you borrowed decades ago, you’re not alone. Here’s a breakdown of what’s happening, why it matters, and what you can do to stay in control.
Resumption
During the pandemic, many borrowers who were behind on their federal student loans caught a break. Collection efforts were paused. But that pause is officially over. As of May 5, the government has resumed automatic deductions from Social Security checks for those in loan default.
This move came under the Treasury Offset Program, which allows the government to take up to 15% of a person’s Social Security benefit to cover unpaid federal debts — student loans included. If someone’s monthly check is $1,976, they could lose about $296.40 per month if the full 15% is withheld. That’s a significant chunk, especially for retirees living on fixed incomes.
Default
Defaulting on a student loan isn’t something that happens overnight. It typically occurs when you haven’t made a payment for 270 days — that’s nine months of silence. Once you hit that mark, your loan moves from the servicer to a collection agency. From there, the government can pursue aggressive recovery strategies, including Social Security garnishment.
But that’s not all. Being in default shuts the door on key benefits. You lose eligibility for deferment, forbearance, or affordable repayment options. And forget about getting more federal aid or returning to school using Pell Grants. It also tanks your credit score, making it harder to buy a house, car, or even get approved for a credit card.
Options
Luckily, there’s a way to dodge this financial bullet. The key is reaching out before things get too far gone. If you’re behind, start by contacting your loan servicer. They can help you apply for programs like deferment or income-driven repayment, which can lower your monthly payment based on what you earn.
Don’t wait until your check shrinks — act early. Programs like income-driven repayment can offer breathing room by matching your payments to your budget, sometimes even reducing your monthly due to $0, depending on your income and family size.
Here’s a simple look at how garnishment could affect Social Security payments:
| Monthly Social Security | Garnishment % | Amount Deducted | Remaining Benefit |
|---|---|---|---|
| $1,500 | 15% | $225 | $1,275 |
| $1,800 | 15% | $270 | $1,530 |
| $1,976 (Average) | 15% | $296.40 | $1,679.60 |
| $2,200 | 15% | $330 | $1,870 |
Fallout
Many retirees depend entirely on their monthly Social Security payments to stay afloat. For them, this isn’t just a minor inconvenience — it’s a hit to their ability to pay rent, buy groceries, or cover medication. With 450,000 Americans aged 62 and over already in default, the impact is widespread.
And there’s also public backlash. Critics argue that these policies punish the most financially vulnerable while doing little to address the root causes of student debt. Even federal officials have admitted that the system needs reform. While the government claims it’s helping borrowers return to repayment, others see it as feeding them to a broken debt collection machine.
Reform
What happens next? The Trump administration has signaled big changes to how student loans are managed. One proposed reform would simplify the current patchwork of income-driven repayment options into just two plans. That might make things less confusing for new borrowers, but it remains to be seen whether it will help those already deep in debt.
Until broader reforms take hold, the best way to protect yourself is to stay informed and take action early. If you’re behind, don’t hide. Reach out, ask questions, and get on a plan that works for your budget. A few phone calls now could save you hundreds each month down the road.
FAQs
How much Social Security can be garnished?
Up to 15% of your monthly benefit can be taken.
When do student loans go into default?
After 270 days of missed payments.
Can I stop Social Security garnishment?
Yes, by setting up a repayment or rehabilitation plan.
Does default hurt my credit score?
Yes, it significantly damages your credit history.
What’s the average Social Security payment?
Roughly $1,976 per month as of 2025.
