Millions of Americans who rely on Social Security could soon see changes to their monthly payments as the federal government reactivates long-standing debt recovery practices tied to defaulted student loans.
Beginning in June, federal officials will resume Treasury Offset Program (TOP) collections that were suspended during the COVID-19 pandemic. Newsweek reports the Treasury Department is moving ahead with offsets targeting borrowers already warned of their default status.
Rising Student Loan Debt Among Older Americans
Today, nearly 2.9 million Americans aged 62 and older carry federal student loan debt—a 70% increase since 2017, according to the U.S. Department of Education. Of these, over 450,000 borrowers are in default, making them subject to potential reductions in Social Security payments through TOP.
How the Treasury Offset Program Impacts Social Security
The Treasury Offset Program allows the federal government to withhold up to 15% of a borrower’s Social Security benefits to recover defaulted student loan balances. However, the law ensures that benefits can’t be reduced below $750 per month.
Federal student loans enter default after 270 consecutive days of non-payment. As Tom O’Hare, a college advisor with Get College Going, explains:
“Once a loan reaches 270 days past due, it is considered in default and typically transferred from a loan servicer to a collection agency acting on behalf of the federal government.”
From there, the government may implement aggressive recovery efforts, including wage garnishment and deductions from federal benefits like Social Security.
Borrowers Receive a One-Time Warning Before Offsets Begin
Before deductions start, the Department of Education sends a Notice of Intent to Offset to the borrower’s last known address. This letter outlines the government’s plan to start garnishment in 65 days and provides notice of potential negative credit reporting.
Importantly, the letter is only sent once. A Department of Education spokesperson told CNBC that some borrowers may have received this notification before the pandemic-era pause.
Trump Administration Authorizes Policy Resumption
The restart of collection efforts took effect on May 5, under authorization from the Trump administration. These measures include automatic garnishments from Social Security checks for those in default.
“These recovery practices have been used for over 20 years,” said O’Hare. “They were paused during the pandemic to provide relief but are now fully active again.”
Mixed Reactions from Officials and Advocates
In a Wall Street Journal op-ed, Education Secretary Linda McMahon urged borrowers to act:
“If you are a student borrower with a federal loan balance and haven’t been making payments, you must restart payments now.”
Advocates disagree. Mike Pierce, executive director of the Student Borrower Protection Center (SBPC), criticized the decision:
“Federal law gives borrowers a way out of default and the right to affordable payments. But since February, Donald Trump and Linda McMahon have blocked those paths and reactivated harmful collection practices. It’s cruel, unnecessary, and economically reckless.”
Options for Borrowers in Default
Despite the resumption of garnishments, defaulted borrowers still have options. Bethany Hubert, a financial aid expert at Earnest, advised:
“Start by contacting your loan servicer. Ask about deferment, forbearance, or income-driven repayment plans that can lower monthly payments.”
Additional strategies, such as loan rehabilitation or consolidation, can help borrowers resolve their default status and regain access to federal protections—including shielding Social Security payments from garnishment.
Borrowers are encouraged to act quickly to avoid long-term financial consequences.
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
Vikas Lalit is an experienced content writer at OTE News, covering business, economy, and international affairs. With a degree in Journalism, he combines analytical thinking with engaging storytelling to deliver well-researched updates. Vikas is passionate about uncovering underreported stories that impact readers.
Outside of work, he enjoys playing chess, following cricket, and writing short stories. His commitment to integrity and in-depth analysis strengthens OTE News’ mission of providing trustworthy journalism.