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Social Security recipients face a threat from delinquent student loans

They could see a 15% reduction in their monthly benefits

Updated:

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By:
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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

Key Insights

  • Social Security recipients with delinquent student loans may face a 15% reduction in monthly benefits, even if it’s their only source of income, due to federal garnishment policies.
  • More than 100,000 retirees were impacted by benefit offsets in 2024, with many left below the poverty line, highlighting the severity of the issue.
  • Advocates urge reforms such as easier hardship exemptions and debt relief for vulnerable seniors, while recipients are encouraged to act early to avoid default.

Student loan payments, deferred during the pandemic, have resumed, and it could be a painful shock for some Social Security recipients. Retired Americans relying on Social Security for their primary source of income may face unexpected financial hardship if they have delinquent student loan debt, either for their education or for their children’s. 

The federal government continues to enforce policies that allow student loan defaults to trigger Social Security benefit garnishments, threatening the financial stability of older borrowers.

According to the Government Accountability Office (GAO), tens of thousands of Social Security recipients are subject to benefit reductions each year because of unpaid federal student loans. The Department of the Treasury is authorized to withhold up to 15% of a monthly Social Security payment through a process known as the Treasury Offset Program. This reduction can occur even if the recipient depends solely on these benefits to survive.

Older Americans face a combination of skyrocketing education costs, long-term repayment plans, and compounding interest that leaves some with loan balances they can’t feasibly pay off. Some borrowers took out loans to help children or grandchildren attend college, while others went back to school later in life. Either way, if payments are missed and loans fall into default, the government can—and does—intervene.

A 2024 Congressional Budget Office (CBO) report estimated that nearly 114,000 retirees had their benefits garnished during the previous year alone. Many received as little as $750 per month after the offset—well below the poverty line. While hardship exemptions exist, they can be difficult to obtain and are not automatically granted.

Advocates call for reform

Consumer rights groups and some lawmakers are calling for reforms to protect vulnerable retirees from punitive debt collection. Proposals include raising the protected income threshold, simplifying the hardship exemption process, and canceling debts for the most financially fragile borrowers.

Older Americans worried about student debt should take proactive steps to avoid garnishment:

  • Contact your loan servicer early to explore options like income-driven repayment or consolidation.
  • Apply for hardship exemptions if Social Security is your only source of income and you’re at risk of garnishment.
  • Monitor your loan status to avoid default, as garnishments only occur once a loan is in default.

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