Education Department pauses Social Security garnishments for defaulted student loans
The Department of Education paused a plan to garnish Social Security benefits of people who have defaulted on their student loans. File Photo by Ken Cedeno/UPI | License Photo
June 3 (UPI) -- The U.S. Department of Education paused a plan to garnish Social Security checks to repay defaulted student loans.
Spokesperson Ellen Keast said Monday that the Department "has not offset any social security benefits since restarting collections on May 5, and has put a pause on any future social security offsets." The Hill, CNBC and Newsweek reported.
"In the coming weeks, the Department will begin proactive outreach to recipients about affordable loan repayment options and help them back into good standing," Keast said.
"The Trump Administration is committed to protecting Social Security recipients who often times rely on a fixed income."
The Education Department announced in April that its Office of Federal Student Aid would resume collections of defaulted federal student loans on May 5, with such actions being on hold since March 2020. The stoppage of collections was orchestrated under the Biden administration.
Borrowers who owed were to receive emails from the FSA to make them aware and to instruct them to contact the agency's Default Resolution Group to first make a monthly payment, then either enroll in an income-driven repayment plan or sign up for loan rehabilitation. Notices that informed of administrative wage garnishment were to arrive later in the summer at an unannounced date.
The student loan portfolio is reportedly worth $1.6 trillion, and the federal government can seize borrowers' paychecks, tax refunds or Social Security retirement and disability benefits to collect on student loans.
Social Security recipients could have as much as 15% of their checks taken to pay their defaulted student loans.
The Consumer Financial Protection Bureau reported in January that around 452,000 federal student loan borrowers aged 62 and older are currently in default and most likely have begun to collect Social Security benefits.
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