Thousands of older Americans relying on Social Security may soon face a harsh financial blow. Starting in June 2025, the federal government is resuming garnishments on Social Security checks for those in default on federal student loans. As a result, monthly benefits could drop to as low as $750, sparking widespread concern among seniors living on fixed incomes.
Why This Is Happening
This move comes after a five-year pause on involuntary debt collections that began during the COVID-19 pandemic. The suspension had shielded defaulted borrowers from having portions of their Social Security benefits withheld. But with collections set to restart, many vulnerable beneficiaries now face automatic deductions unless they act quickly.
Under current U.S. law, the government can garnish up to 15% of a person’s monthly Social Security benefits above a protected threshold. That threshold, which hasn’t been updated since 1996, is $750 per month. This means anyone receiving more than that amount could see the excess garnished to repay outstanding student loans.
For example, if you receive $1,000 per month from Social Security, up to $37.50 could be withheld every month for student loan repayment. But for many defaulted borrowers, especially those with low total benefits, this could reduce their monthly income to the legal minimum of $750.
Who’s Affected?
According to data from the U.S. Government Accountability Office, around 452,000 Americans aged 62 and older are currently facing garnishments for federal student loans. Most of these individuals depend heavily on their Social Security benefits to cover essential expenses such as food, housing, and medication.
Experts and advocacy groups argue that the outdated $750 threshold doesn’t reflect current economic conditions. With inflation and living costs rising rapidly, slashing monthly benefits to that amount could push thousands of seniors below the poverty line.
How to Avoid Garnishment
Fortunately, there are ways for borrowers to avoid or stop these garnishments, even if they’re currently in default:
1. Loan Rehabilitation
Borrowers can enter a loan rehabilitation program, where they agree to make nine on-time monthly payments over ten months. This can eventually remove the default from their credit history. However, garnishment may continue until at least five payments are made.
More information can be found here: Studentaid.gov – Loan Rehabilitation
2. Loan Consolidation
You can consolidate your defaulted federal student loans into a new Direct Consolidation Loan, which gives you access to income-driven repayment plans and potential loan forgiveness options. However, it won’t erase the record of your past default.
3. Bankruptcy as a Last Resort
While traditionally difficult, bankruptcy is now a more viable option for student loan discharge under new guidelines issued by the Biden administration. These changes simplify the process and increase the chances of success in eliminating student loan debt.
Public Outcry and Policy Debate
Several advocacy groups and lawmakers are urging reforms. They argue that the policy of garnishing Social Security benefits contradicts the very purpose of the program: to provide a safety net for the elderly and disabled.
Critics also point out the unfair burden placed on older borrowers, many of whom may have taken out loans for their children’s education or to attend school later in life in hopes of boosting their careers.
According to a report from PBS NewsHour, advocates are calling for an increase in the protected threshold and a permanent end to Social Security garnishments.
What Should You Do?
If you or someone you know is receiving Social Security and has outstanding student loan debt, it is crucial to act now. Contact your loan servicer or visit Federal Student Aid to explore your options.
You can also reach out to organizations like the National Consumer Law Center (NCLC), which provide free or low-cost legal guidance for those in financial distress.
Final Thoughts
The restart of student loan garnishments is more than just a policy shift—it’s a life-altering event for hundreds of thousands of older Americans. With monthly Social Security benefits at risk of falling to just $750, many could be forced to choose between food, medicine, and shelter.
While options exist to avoid or reduce garnishment, awareness and timely action are key. Lawmakers are under growing pressure to update outdated rules, but until reforms are enacted, beneficiaries must take proactive steps to protect their income.
