Millions of Social Security recipients could see a reduction in their May payments as the U.S. Treasury resumes debt collection efforts under the Treasury Offset Program (TOP). The deductions could amount to as much as $1,641, depending on the size of the benefit and the type of federal debt owed—particularly defaulted student loans.
What Is the Treasury Offset Program?
The Treasury Offset Program is a federal debt collection system run by the U.S. Department of the Treasury. It allows government agencies to collect unpaid debts by garnishing federal payments—including Social Security benefits, federal tax refunds, and other government disbursements.
Why Are Deductions Happening in May 2025?
Due to the COVID-19 pandemic, the federal government had paused most debt collections starting in March 2020. This included offsets against Social Security and tax refunds. However, the Social Security Administration (SSA) and the Department of Education (DOE) have announced that collections will resume in May 2025.
As a result, individuals who have not made efforts to resolve their defaulted student loan debts may face garnishments starting next month.
How Much Could Be Deducted?
Under TOP regulations, the maximum deduction from Social Security is 15% of your monthly benefit, but only if it leaves at least $750 remaining for the recipient. For higher earners, this could mean a deduction of up to $1,641, depending on benefit size.
For example:
- A monthly benefit of $2,500 could be reduced by $375 (15%).
- A $1,000 benefit could be reduced by $150, as long as $750 remains.
These offsets do not require a court order and are automatic once the debt is referred to the Treasury.
Which Debts Qualify for Garnishment?
TOP typically collects a variety of federal and state debts, including:
- Defaulted student loans
- Unpaid child support
- Delinquent state income taxes
- Overpaid unemployment benefits
- VA benefit overpayments
What Should Affected Individuals Do?
If you believe you are at risk of an offset, immediate action is crucial. According to the Department of Education, those in student loan default must take action by May 5, 2025, to avoid having their debts sent to TOP.
Here’s what you can do:
- Rehabilitate your loan by making nine on-time payments.
- Consolidate your loan into a new Direct Consolidation Loan and enroll in an income-driven repayment plan.
- Make a partial or full payment to reduce the outstanding debt.
The Department of Education is also sending out email notices to inform borrowers of the deadlines and options. If you need help, contact the Federal Student Aid Information Center or call 1-800-433-3243.
Are Any Protections Available?
Some protections exist, including:
- No deduction can reduce your Social Security payment below $750/month.
- You may request a hardship waiver or appeal the offset if you believe it is in error.
- Individuals over 65, disabled, or receiving SSI may be eligible for additional exemptions.
To learn more about exemptions and hardship waivers, visit the SSA’s official site.
Final Thoughts
While debt collection programs like TOP are legal and longstanding, they can cause financial strain, particularly on low-income seniors and people with disabilities. Experts recommend resolving federal debts proactively to avoid disruptions in critical income streams like Social Security.
If you’re concerned about upcoming deductions, speak with a student loan counselor, your loan servicer, or a financial advisor. Acting before the May 5 deadline may save you hundreds—or even thousands—of dollars.
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.
