New Social Security Garnishments Will Likely Start Soon: What To Know

Newsweek

5 hours ago

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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New Social Security garnishments are set to kick in soon, and they could cause 15 percent of payments to be withheld for retired workers and Americans with disabilities.
The garnishment will apply to roughly 452,000 beneficiaries who are in default on their student loans.
Why It Matters
Americans hold roughly $1.75 trillion in student loan debt, with some of that carried by seniors and disabled workers who are in default on their loans.
The Trump administration has marked a departure from then-President Joe Biden's student loan forgiveness-friendly policies, and the shift has meant many student loan borrowers see higher payments and lose access to income-driven repayment plans like SAVE. Similarly, a percentage of Social Security payments will soon be withheld for those in default.
Roughly 22 million Americans were lifted out of poverty due to their Social Security benefits in 2023, according to the Center on Budget and Policy Priorities.
A Social Security Administration (SSA) office in Washington, D.C., on March 26, 2025.
A Social Security Administration (SSA) office in Washington, D.C., on March 26, 2025.
SAUL LOEB/AFP via Getty Images
What To Know
The Department of Education (DOE) issued a pause in the restart of garnishments for these borrowers in early June, but the pause is expected to end soon.
"If you receive monthly federal benefit payments, such as Social Security benefit payments, and Railroad and Office of Personnel Management retirement benefits you may have received a letter from the Department of Treasury that listed a date when offsets to your payments was scheduled to begin. Please be aware that the Department of Education is delaying offsets of these monthly benefits for a couple of months and plans to resume sometime this summer," the DOE said.
It's not yet clear when the 15 percent garnishment rate will apply despite the DOE saying it would kick start "sometime this summer."
"These are mostly Parent PLUS loans from decades ago. Think about 70 year olds who co-signed for their kids' education in the 1990s and got buried by compound interest," Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. "It's a family wealth transfer in reverse. Instead of leaving something behind, these seniors are having their final safety net shredded for loans they probably forgot they even had."
On July 24, Social Security garnishments were around 1 million beneficiaries who had been overpaid started, meaning 50 percent of Social Security income would be withheld until the overpayment was cleared out. During Biden's time in office, that overpayment recovery rate was just 10 percent.
A significant number of federal student loan borrowers are seniors today, according to the Consumer Financial Protection Bureau, which found borrowers aged 62 and older jumped by 59 percent, from 1.7 million to 2.7 million between 2017 and 2023.
What People Are Saying
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: "My advice to families with elderly parents: Check their credit reports now. If there's federal student debt lurking, you've got maybe 30 days to figure out consolidation options before the garnishments hit."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "These garnishments target individuals in default on their student loans who are currently receiving Social Security benefits. The exact timeline for the nearly 452,000 delinquent borrowers hasn't been set, but one thing is certain — the current administration intends to collect."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "Much in the same way that a few million borrowers who are in delinquency over student debt and could face their paychecks being garnished, those receiving Social Security benefits could find themselves in the same situation if they haven't been making payments."
What Happens Next
For those relying solely on Social Security, the garnishment hit could be significant, especially if most of your benefits are already taxable.
"Quick napkin math: If you're in the 22 percent bracket and have a 15 percent garnishment for delinquency, you're effectively losing about 26 percent of your benefits to taxes and repayments," Thompson said. "That's a painful bite for anyone on a fixed income, particularly with inflation continuing to erode real buying power."