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From June 2025, a significant group of Social Security recipients could face monthly reductions in their checks due to unpaid student debt
The Trump istration has confirmed that Social Security recipients who are in default on federal student loans will begin to see a 15% reduction in their monthly payments. This measure marks the resumption of collections that had been suspended since March 2020 due to the COVID-19 pandemic, under the Treasury offset program known as the Treasury Offset Program (TOP).
The decision will primarily impact seniors and people with disabilities who rely on Social Security as their primary source of income. According to the Department of Education, about 195,000 borrowers have already received collection notices, and all 5.3 million delinquent borrowers are expected to receive similar notifications over the summer.
The law allows the government to garnish up to 15% of monthly benefits, although it must guarantee a protected minimum of $750 per month. For many older adults, this can mean the difference between meeting their basic needs or falling deeper into poverty.
The gradual plan to resume collection actions
The process of reactivating collections follows the official end of the pause period initiated by the Biden istration, which ended in October 2023. Since then, the Department of Education has implemented a phased plan to resume collection actions, with June being the first month in which garnishments will be applied on a large scale
The decision has been heavily criticised by advocacy groups such as the National Consumer Law Center, which sees the move as "punitive and harmful to vulnerable people already facing economic hardship".
Although the impact will be considerable, there are options to avoid or stop the cuts. Borrowers can enroll in programs such as loan rehabilitation, income-driven repayment (IDR) plans or the Fresh Start program, which allows them to temporarily get out of default and avoid garnishment. In addition, those facing extreme hardship can apply for economic hardship waivers or apply for student loan forgiveness if they qualify. Notices sent by the Department of Education will include details on how to access these resources and stop the garnishment process before it begins.
Experts warn that this policy could trigger significant political and social consequences, as approximately 2.9 million people over the age of 62 still have federal student loans, and 452,000 of them are currently in default
Many of these adults signed loans to help children or grandchildren and are now facing financial penalties in retirement. As the cost of living continues to rise, the reduction in benefits could intensify the economic pressure on an already precarious population. Authorities recommend acting quickly and seeking guidance before the cuts take effect at the end of June.