Borrowers falling behind on student loans may face up to 15% of their Social Security benefits withheld.
Seniors in Danger: Unpaid Student Loans Threaten Social Security Benefits
Got unpaid student loans? Better keep an eye on your Social Security check. With the Trump administration's new policy, you could be face-to-face with a hefty decrease in your benefits!
Here's the scoop. If you owe on your student loans and are behind on payments, the government could slice a good chunk out of your Social Security benefits. This policy became official earlier this year, and experts warn that collections could start as early as June.
For those who rely on their Social Security checks to make ends meet, this could be a devastating blow. With over 2.9 million seniors age 62 and older with federal student loans (as of the first quarter of 2025), it's a growing concern. Not to mention, the number of seniors with student debt has increased by 71% since 2017, according to Education Department data.
A staggering 450,000 seniors in default on their federal student loans are likely to be receiving Social Security benefits, as reported by the Consumer Financial Protection Bureau.
Here's the nitty-gritty. Social Security recipients could see up to 15% of their monthly benefits slashed to repay their defaulted student debt. The good news is, beneficiaries will still be left with at least $750 a month. Still, with monthly bills on the line, it's a tough pill to swallow.
And here's the kicker. Borrowers may not receive much notice before their benefits are seized. Higher education expert Mark Kantrowitz reported that, under the Trump administration, borrowers may be getting less notice as the Education Department seems to assume borrowers were already notified before the Covid-19 pandemic.
"The failure of the U.S. Department of Education to provide the 65-day notice limits the ability of borrowers to challenge the Treasury offset of their Social Security benefit payments," Kantrowitz said.
So, what can you do about it? Once you receive a notice about an upcoming offset, you can challenge the collection activity. The notice should include information on how to contest the action. You can potentially prevent the offset if you can demonstrate a financial hardship or have a pending student loan discharge.
The best way to stay clear of this situation? Get current on your loans. Contact your loan servicer and explore options like enrolling in an income-driven repayment plan. For additional help, turn to resources provided by organizations like The Institute of Student Loan Advisors.
Stay vigilant, seniors! Keep your contact information up to date and be alert for collection notices to safeguard your Social Security benefits.
Warning!
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[1] Betsy Mayotte, president of The Institute of Student Loan Advisors
[2] Mark Kantrowitz, higher education expert
[3] Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program
[4] Consumer Financial Protection Bureau
[5] Education Department data
[6] CNBC 5-May-2023 article on student loans and Social Security offsets
If you are a senior with unpaid student loans and relying on Social Security checks, you could face a significant decrease in your benefits due to the new policy. To avoid this, consider getting current on your loans, enrolling in an income-driven repayment plan, and seeking help from organizations like The Institute of Student Loan Advisors. Keep your contact information up to date to safeguard your Social Security benefits and be alert for collection notices.
