Social Security recipients risk seeing their benefit reduced if they’ve defaulted on their student loans.
The Trump administration just announced that it would proceed with withholding federal benefits from defaulted student loan borrowers, and that it could garnish payments as early as June.
That involuntary collection effort can have severe implications for those who depend on the benefits to cover most, if not all, of their bills, consumer activists claim.
There are approximately 2.9 million individuals 62 and above with federal student loans, as of the first quarter of 2025, based on Education Department figures. That is a 71% jump from 2017 when there were 1.7 million such borrowers, based on the figures.
Over 450,000 borrowers in that age bracket are in default on federal student loans and likely to be collecting Social Security benefits, according to the Consumer Financial Protection Bureau.
This is what borrowers should know.
As much as 15% of Social Security benefits may be withheld
Social Security beneficiaries can usually expect to have up to 15% of their monthly benefit reduced to repay their defaulted student loan, but the beneficiaries must be left with at least $750 a month, experts added.
The offset limit is the same “no matter what type of benefit,” such as retirement and disability benefits, said higher education expert Mark Kantrowitz.
The 15% offset comes from your total benefit payment before deductions, including your Medicare premium, Kantrowitz said.
Little notice given
Student loan borrowers whose federal benefits are being offset appear to be receiving less notice under the Trump administration, Kantrowitz said.
Although a 65-day advance notice once was standard practice, it appears the Education Department is now making the assumption borrowers in default had already been advised of potential collection action before the Covid-19 pandemic, he added.
“The U.S. Department of Education’s failure to give the 65-day notice restricts the ability of borrowers to contest the Treasury offset of their Social Security benefit payments,” Kantrowitz said.
Nevertheless, borrowers must receive at least a 30-day notice, Kantrowitz added. The notice must be sent to your last known address, so borrowers need to ensure their loan servicer has their latest contact information.
The Education Department gave defaulted federal student borrowers the notice required, a spokesperson said to CNBC after collections resumed May 5.
“The notice can be sent one time, and borrowers might have gotten this notice prior to Covid,” the spokesperson replied.
You can still fight offset
After you get a notice that your Social Security benefits are going to be offset, you should be able to fight the collection action, Kantrowitz said. The notice should have information about how you can do that, he said.
You might be able to avoid the offset if you can document a financial hardship or pending student loan discharge, Kantrowitz said.
“Borrowers who get these notifications don’t need to panic,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program. “They need to contact someone for assistance as soon as possible.”
Removing yourself from default
The best way to prevent the offset of your Social Security benefits is to become current on your loans, according to Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit organization.
You can call the government’s Default Resolution Group and seek several different options to exit default, including entering into an income-driven repayment plan.
“If Social Security is their sole income, their benefit under those plans would probably be zero,” Mayotte said.