No government program has played a bigger role in financially supporting Americans than Social Security. In 2023, an estimated 22 million people were pulled above the federal poverty line by their Social Security income, 16.3 million of whom were aged 65 and over, according to the Center on Budget and Policy Priorities. If this program didn't exist, the poverty rate for retirees would jump nearly fourfold to an estimated 37.3%.
Getting as much as possible out of Social Security isn't a luxury for most beneficiaries -- it's nothing short of a necessity. But for some of the nearly 70 million people who receive a monthly benefit from America's leading social program, their payout is facing a sizable cut.
Beginning July 24, Social Security garnishment recommenced for more than an estimated 1,000,000 beneficiaries who've been overpaid. The Donald Trump administration ended the Joe Biden-era overpayment recovery rate of 10% and instituted a garnishment rate on Social Security income of 50% until the overpayment has been satisfied.
Unfortunately, another Social Security garnishment is expected to be reinstated by "sometime this summer." The all-important question is, "Will your Social Security benefit be affected?"
President Trump in an Oval Office meeting. Image source: Official White House Photo by Daniel Torok.
Delinquent federal student loan garnishment is back on the table
In March 2020, during the early stages of the COVID-19 pandemic and the final year of President Trump's first term in the White House, the collection of federal student loan repayments was suspended. For more than five years, this suspension was never lifted, which allowed a sizable percentage of borrowers to fall into some level of delinquency.
Based on data from the U.S. Department of Education (DOE), approximately 42.7 million Americans owe the federal government $1.6 trillion in outstanding federal student loans as of April 2025. Roughly 4 million of these borrowers are between 91 days and 180 days late on their monthly payments, and more than 5 million are more than 360 days late on their payments.
When Donald Trump took office for his nonconsecutive second term, he made government efficiency a primary focus. This includes collecting on the federal government's outstanding debts, such as delinquent federal student loans.
Though we often think of federal student loan borrowers as being in their teens, 20s, and 30s, loans outstanding for seniors have climbed rapidly. The number of borrowers aged 62 and older jumped by 59%, from 1.7 million to 2.7 million between 2017 and 2023, per the Consumer Financial Protection Bureau (CFPB). Among these aged borrowers, the CFPB estimates 452,000 are currently delinquent on their federal student loan(s) and receiving a Social Security benefit.
Although the DOE announced a pause in the expected restart of garnishments at a 15% monthly rate for these 452,000 delinquent federal student loan borrowers in early June, this pause is only temporary. Per the DOE:
"If you receive monthly federal benefit payments, such as Social Security benefit payments, and Railroad and Office of Personnel Management retirement benefits you may have received a letter from the Department of Treasury that listed a date when offsets to your payments was scheduled to begin. Please be aware that the Department of Education is delaying offsets of these monthly benefits for a couple of months and plans to resume sometime this summer."
While the DOE and Trump administration haven't provided any specific timeline (beyond "sometime this summer") as to when this garnishment may be kick-started, a 15% garnishment rate should be expected very soon for the retired workers, survivor beneficiaries, and workers with disabilities who are among the estimated 452,000 seniors currently in default on their federal student loan(s).
Image source: Getty Images.
Delinquent federal student loan borrowers may be able to legally avoid or reduce their garnishment
If there's a bit of a silver lining to be found when it comes to federal student loan garnishment, it's that beneficiaries must be left with a minimum Social Security payout of $750 per month.
If you're a lifetime low earner and among the estimated 452,000 delinquent borrowers, your garnishment rate could be less than 15%. For instance, if you receive $800 per month from Social Security, the most that could be garnished is $50 each payout (leaving you with the mandated minimum of $750), which is considerably less than a 15% rate.
Beyond this minimum payout mandate, which isn't a requirement of all forms of Social Security income garnishment, delinquent federal student loan borrowers receiving Social Security benefits have two perfectly legal options at their disposal to waive or reduce their liability.
To begin with, individuals with qualifying disabilities may be able to completely waive their federal student loan repayment obligations via a total and permanent disability (TPD) discharge. In addition to submitting the TPD application, you'll need documentation from a medical professional certifying that you're unable to "engage in substantial gainful activity," per the application.
The CFPB notes that while the DOE and Social Security Administration have automated TPD eligibility and the federal student loan cancellation process for beneficiaries who become disabled before reaching their full retirement age, responsibility for the TPD application process falls entirely onto aging beneficiaries if they become disabled after reaching their full retirement age.
The other perfectly legal option available to Social Security beneficiaries who are in arrears on their federal student loan(s) is to file for a financial hardship with the DOE.
Similar to TPD eligibility, everything boils down to documentation. To qualify for a financial hardship exemption, you'll need to prove to the DOE that your documented income, less the 15% garnishment rate, would be lower than your qualified expenses.
Using data from the Federal Reserve Board's Survey of Household Economics and Decisionmaking, the CFPB estimated that 82% of the 452,000 Social Security recipients currently in default would qualify for a financial hardship exemption. However, statistics show that very few seniors apply for this exemption or know it exists. In other words, this is a missed opportunity for delinquent federal student loan borrowers to potentially reduce what they owe.
