Getting as much as possible out of Social Security isn’t a luxury for most retirees — it’s an absolute necessity.
This summer, the Trump administration will begin garnishing up to 15% of Social Security benefits for delinquent federal student loan borrowers.
Two perfectly legal solutions exist that may allow a majority of tardy federal student loan borrowers to avoid having their Social Security checks garnished.
For most retirees, Social Security isn’t just income that’s deposited into their checking or savings account on a monthly basis. It represents a financial lifeline that many would likely struggle to make do without.
In 2023, Social Security was responsible for lifting 22 million people above the federal poverty line, some 16.3 million of whom were adults aged 65 and above. Meanwhile, 23 years of annual surveys from national pollster Gallup find that up to 90% of retirees require their monthly benefit, to some degree, to make ends meet.
Getting as much out of Social Security isn’t a luxury — it’s often a necessity.
President Trump speaking with reporters. Image source: Official White House Photo by Shealah Craighead, courtesy of the National Archives.
For well over six decades, the federal government has played a role in subsidizing and guaranteeing student loans. As of April 2025, the U.S. Department of Education (DOE) notes that 42.7 million Americans had a cumulative $1.6 trillion in federal student loans outstanding.
However, the collection of federal student loan repayments was halted during the early stages of the COVID-19 pandemic (March 2020) and was simply never lifted. According to the DOE, more than 5 million borrowers haven’t made a payment in 360 days, and another 4 million are between 91 and 180 days late on their monthly payments.
While higher education student loans may sound like something that affects relatively younger Americans, they’ve become a prominent issue for retirees. Whereas the aggregate number of student loan borrowers under the age of 62 has declined by 1% from 2017 to 2023, the number of student loan borrowers aged 62 and above has surged 59% to approximately 2.7 million over the same period, based on data from the Consumer Financial Protection Bureau (CFPB).
Per the CFPB, an estimated 452,000 of these senior borrowers have defaulted on their federal student loans and are likely receiving Social Security benefits.
Since President Donald Trump took office in January, his administration has targeted perceived government fraud and is aiming to make federal operations more efficient. One of the many changes under Trump, vis-à-vis the Social Security Administration (SSA), is the reimplementation of Social Security garnishments for delinquent federal student loan borrowers.
Beginning “sometime this summer,” per Trump’s administration, tardy borrowers receiving a Social Security benefit — this applies to all types of beneficiaries (retired workers, survivors of deceased workers, and workers with disabilities) — could see their payouts garnished by up to 15%. The one caveat to this garnishment is that recipients must be left with at least a $750 monthly Social Security benefit. Thus, if your normal payout is $825 per month, the maximum garnishment would be $75 per month instead of the flat 15%.
Additionally, the Trump administration isn’t planning to offer delinquent federal student loan borrowers a 65-day warning prior to potential garnishment, as has been customary in the past. Rather, communications sent out provide just 30 days’ notice that garnishments are possible if borrowers are still in default.
Image source: Getty Images.
According to the CFPB, 37% of the Social Security beneficiaries who have a federal student loan outstanding (delinquent or not) currently rely on their monthly check from America’s leading retirement program for 90% (or more) of their income. Even a 15% garnishment for defaulted borrowers in this category has the potential to be financially devastating.
It goes without saying that the easiest way to avoid this new garnishment by the Trump administration is to not be in default on your federal student loan(s). But for the roughly 452,000 Social Security retirees set to be impacted by this change in policy, there are two under-the-radar yet perfectly legal solutions that should allow a majority to avoid having their payouts garnished.
To begin with, some of these defaulted borrowers may qualify for the Total and Permanent Disability (TPD) discharge program, which cancels federal student loans and stops forced collections.
As the CFPB pointed out in a January research report, the DOE entered into a data-matching agreement with the SSA in 2021 to automate the TPD eligibility and federal student loan cancellation processes for beneficiaries who become disabled prior to reaching full retirement age (currently age 67 for anyone born in or after 1960).
However, this TPD application process is failing Social Security beneficiaries who become permanently disabled after they reach full retirement age. The CFPB notes that the onus of applying for a TPD discharge of their federal student loans and/or garnishment falls onto aged beneficiaries. Census survey data shows that approximately 22% of Social Security recipients with federal student loans report having a permanent disability, per the CFPB’s report.
Social Security retirees currently in default on their federal student loan(s) can also potentially avoid having their monthly check garnished by applying for a financial hardship with the DOE.
Defaulted borrowers will be required to provide documentation of their income and qualifying expenses to the DOE. If an individual’s qualifying expenses are larger than their documented income — especially pertaining to a possible 15% garnishment of their Social Security payout — the DOE will likely grant a financial hardship exemption.
Based on data from the Federal Reserve Board’s Survey of Household Economics and Decisionmaking, the CFPB estimates that a whopping 82% of Social Security beneficiaries currently in default on their federal student loans would qualify for the hardship exemption — in other words, their qualified expenses would exceed their documented income. Yet, a 2015 Government Accountability Office report found that fewer than 10% of Social Security recipients with forced federal student loan collections applied for a hardship exemption.
If delinquent borrowers were to simply apply for this financial hardship with the DOE, a majority would likely be granted it.
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