Federal Government Garnishes Social Security Benefits for 195,000 Older Americans to Collect Defaulted Student Loans

Starting in June 2025, the federal government has resumed garnishing Social Security benefits from Americans who are in default on their federal student loans, impacting roughly 450,000 beneficiaries aged 62 and older. This policy shift, initiated by the Trump administration after a five-year pause due to the COVID-19 pandemic, allows the Treasury Offset Program to withhold up to 15% of Social Security payments to recover defaulted loans, posing a significant financial risk to retirees who rely heavily on these benefits. Notices were sent to about 195,000 recipients in May, with collections beginning in early June and expected to expand to millions by the summer. Although federal law protects a minimum of $750 per month from garnishment, this amount remains below the federal poverty line, raising concerns about the economic impact on vulnerable seniors. The Biden administration had previously extended the pause on garnishments, but the Trump administration reversed this, emphasizing stricter loan repayment enforcement. Options exist for those facing garnishment, including repayment plans based on income and potential loan forgiveness for disability or financial hardship, with resources available to help borrowers navigate these challenges.