Nearly 500,000 older Americans are facing a new financial challenge as the federal government resumes the garnishment of Social Security benefits to collect on defaulted student loans. After a pandemic-induced pause that lasted more than three years, the Treasury Offset Program (TOP) is back in effect, reigniting fears for financially vulnerable retirees.
This move primarily impacts people aged 62 and older, many of whom depend on Social Security as their primary-if not only-source of income.
Garnishment Resumes After Pandemic Pause
The U.S. Department of Education officially restarted collection efforts on May 5, 2025, as part of a broader effort to normalize student loan repayment operations following the end of pandemic-related relief. During the COVID-19 crisis, the government halted most collection activities, including offsetting Social Security checks for defaulted loans.
However, a one-year grace period following the restart of federal loan payments on September 1, 2023, has now ended. That grace period shielded borrowers from garnishment, but with its expiration, the Department of Education has reactivated TOP to recover overdue debt.
According to government data, approximately 452,000 Social Security recipients are currently in default on their federal student loans and now risk having their benefits reduced.
How Much Can Be Taken?
Under existing law, the federal government can withhold up to 15% of a person’s monthly Social Security benefit to collect on unpaid student loans. However, there is a limit: at least $750 must remain after the deduction. That threshold, last updated in 1996, has not been adjusted for inflation or rising living costs.
Many advocacy groups argue that this minimum is far too low to protect today’s retirees from falling into poverty.
“Retirees living solely on Social Security can’t afford to lose even a fraction of their checks,” said a spokesperson from the National Consumer Law Center. “With the cost of housing, medication, and food rising, garnishing benefits is a hardship for people who can least afford it.”
Why So Many Seniors Still Have Student Loans
The number of older borrowers holding student debt has grown significantly in recent years. Some took out loans for their own education later in life, while others co-signed or borrowed on behalf of children or grandchildren. Others may have seen their loan balances balloon due to compounding interest and collection fees.
Even after years of payments, many borrowers find that their original balances have barely budged-if not increased-due to penalties and accruing interest during long periods of deferment or default.
Past Protections Now Gone
During President Biden’s administration, temporary measures increased the protected income level for garnishment to 150% of the federal poverty line (roughly $1,883/month for a single person in 2024). Those measures were intended to provide a more realistic safety net for low-income borrowers. However, those protections expired with the grace period this year.
The expiration has reignited calls from lawmakers and consumer advocates for reform. A new legislative proposal—The Ending Administrative Garnishment Act of 2025-was introduced by Rep. Ayanna Pressley and Senators Elizabeth Warren and Cory Booker. The bill seeks to ban Social Security garnishments for student debt entirely and to overhaul the way the government collects from delinquent borrowers.
What Borrowers Can Do Now
Borrowers who are in default and at risk of garnishment do have options to stop or prevent it, including:
- Loan Rehabilitation: A process that allows borrowers to make nine affordable monthly payments over ten months. After successful completion, the loan is removed from default status.
- Loan Consolidation: Combining multiple federal loans into one, which may immediately bring a borrower out of default and allow them to enroll in an income-driven repayment plan.
- Income-Driven Repayment Plans (IDR): These plans set monthly payments based on a borrower’s income and family size, often resulting in payments as low as $0 per month. Once enrolled, borrowers are protected from garnishment.
Borrowers are strongly encouraged to contact the Default Resolution Group of the U.S. Department of Education to explore these options and avoid automatic offsets.
A Wake-Up Call for Retirees and Policymakers
With nearly half a million seniors affected, the resumption of garnishment has raised concerns not only about individual financial hardship but also about the effectiveness of the current student loan system.
“This issue highlights the need for comprehensive reform,” said a financial policy analyst at the Brookings Institution. “We’re penalizing older Americans for decisions made decades ago, often under vastly different financial and educational circumstances.”
While student loan policy remains a politically charged issue, the plight of older borrowers has prompted calls for bipartisan action. Whether the proposed legislation gains traction remains to be seen, but for now, thousands of retirees must brace for smaller Social Security checks in the coming months.
Resources for Borrowers
For those affected or concerned about potential garnishments, the following resources provide guidance and assistance:
- U.S. Department of Education
- Federal Student Aid
- Social Security Administration
- Consumer Financial Protection Bureau (CFPB)
- Income-Driven Repayment Application
Conclusion
As the federal government resumes collecting on student loans by targeting Social Security checks, nearly half a million older Americans are facing new uncertainty in retirement. With limited income and growing living expenses, many are left choosing between paying debts from decades ago and covering basic needs today. Whether Congress will step in with lasting protections remains a question-but for now, the garnishments are back.