Some Retirees Could See 15% Of Benefits Garnished As Trump Resumes Debt Collection

WASHINGTON, D.C. — Swaths of Social Security recipients could soon see their monthly benefits reduced as the Trump administration resumes collections on defaulted student loans.

Beginning in June, the U.S. Department of Education will reinstate a policy allowing up to 15 percent of Social Security checks to be garnished from borrowers in default, many of whom are retirees.

Roughly 452,000 borrowers aged 62 and older are currently in default on federal student loans, according to data from the Consumer Financial Protection Bureau. Many of those individuals are believed to be receiving Social Security income.

Nationwide, nearly 3 million people in that age group now hold federal student loans—up 71 percent from 2017, when the number stood at 1.7 million, according to the U.S. Department of Education.

According to the National Consumer Law Center, many borrowers are parents who once co-signed loans or took out Parent PLUS loans for their children. Many of them fell behind on payments due to job losses, medical expenses and other hardships.

There are currently 3.6 million people with Parent PLUS loans and 25 percent of them are age 60 or older.

"A significant portion of today’s parent borrowers are very low-income and are struggling with repayment," the center said.

In such cases, the federal government can seize a portion of a retiree's Social Security benefits to collect on the debt, according to the center.

What's more, the resumed collection efforts are giving borrowers little advance notice, experts say. Previously, the Education Department provided a 65-day notice before garnishing Social Security benefits.

That policy has been dropped, according to higher education expert Mark Kantrowitz, who told NBC News that the department now assumes borrowers received adequate notice before the pandemic.

“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.

Consumer advocates say the policy puts older Americans at risk of deepening poverty. A recent CFPB report found that half of borrowers in this group had skipped medical appointments or gone without necessary prescriptions due to financial strain.

“Forced collection of Social Security benefits affects the financial well-being of the most vulnerable borrowers and can exacerbate any financial and health challenges they may already be experiencing,” the report stated.

What To Do If You Are Facing Collection

Borrowers who find out that their SSI benefits will be offset have the option to contest the collection, Kantrowitz told NBC.

If retirees can prove a financial hardship or have pending student loan discharge, the collection may be prevented or postponed.

“Borrowers who receive these notices should not panic,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program, told NBC. “They should reach out for help as soon as possible.”

Why Is This Happening Now?

The authority to claw back Social Security benefits from retirees was paused during the COVID-19 pandemic and extended under the Biden administration.

Trump reinstated the policy, which could spur wage garnishments, tax refund seizures and offsets to SSI checks this summer.