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Social Security beneficiaries are at risk of receiving a smaller benefit if they’ve fallen behind on their student loans.
The Trump administration recently announced it would move to offset defaulted student loan borrowers’ federal benefits, and warned that payments could be garnished as soon as June.
That involuntary collection activity could have serious consequences on those who rely on the benefits to pay most, if not all, of their bills, consumer advocates say.
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There are some 2.9 million people age 62 and older with federal student loans, as of the first quarter of 2025, according to Education Department data. That is a 71% increase from 2017, when there were 1.7 million such borrowers, according to the data.
More than 450,000 borrowers in that age group are in default on their federal student loans and likely to be receiving Social Security benefits, the Consumer Financial Protection Bureau found.
Here’s what borrowers need to know.
Up to 15% of Social Security benefits can be taken
Social Security recipients can typically see up to 15% of their monthly benefit reduced to pay back their defaulted student debt, but beneficiaries need to be left with at least $750 a month, experts said.
The offset cap is the same “regardless of the type of benefit,” including retirement and disability payments, said higher education expert Mark Kantrowitz.
The 15% offset is calculated from your total benefit amount before any deductions, such as your Medicare premium, Kantrowitz said.
Little notice provided
Student loan borrowers facing offsets of their federal benefits seem to be getting less notice under the Trump administration, Kantrowitz said.
While a 65-day heads-up used to be the norm, it seems the Education Department is now assuming borrowers who are in default were already notified about possible collection activity prior to the Covid-19 pandemic, he said.
“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.
Still, borrowers should get at least a 30-day warning, Kantrowitz said. The notice should be sent to your last known address, so borrowers should make sure their loan servicer has their most recent contact information.
The Education Department provided defaulted federal student borrowers with the required notice, a spokesperson told CNBC after collections efforts resumed May 5.
“The notice may be sent only once, and borrowers may have received this notice before Covid,” the spokesperson said.
You can still contest offset
Once you receive a notice that your Social Security benefits will be offset, you should have the option to challenge the collection activity, Kantrowitz said. The notice is supposed to include information on how you can do so, he said.
You may be able to prevent the offset if you can prove a financial hardship or have a pending student loan discharge, Kantrowitz added.
“Borrowers who receive these notices should not panic,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program. “They should reach out for help as soon as possible.”
Getting out of default
The best way to avoid the offset of your Social Security benefits is to get current on your loans, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
You can contact the government’s Default Resolution Group and pursue several different avenues to get out of default, including enrolling in an income-driven repayment plan.
“If Social Security is their only income, their payment under those plans would likely be zero,” Mayotte said.
