Latest news with #Keast
Boston Globe
3 days ago
- Business
- Boston Globe
Education Department says it will not garnish Social Security of student loan borrowers in default
'The Trump Administration is committed to protecting Social Security recipients who oftentimes rely on a fixed income,' Keast said. Advocates encouraged the Trump administration to go further to provide relief for the roughly 5.3 million borrowers in default. Advertisement 'Simply pausing this collection tactic is woefully insufficient,' said Persis Yu, executive director of the Student Borrower Protection Center. 'Any continued effort to restart the government's debt collection machine is cruel, unnecessary and will further fan the flames of economic chaos for working families across this country.' Student loan debt among older people has grown at a staggering rate, in part due to rising tuition that has forced more people to borrow heavily. People 60 and older hold an estimated $125 billion in student loans, according to the National Consumer Law Center, a sixfold increase from 20 years ago. That led Social Security beneficiaries who have had their payments garnished to balloon from approximately 6,200 beneficiaries to 192,300 between 2001 and 2019, according to the CFPB. Associated Press writer Collin Binkley contributed to this report. Advertisement
USA Today
3 days ago
- Business
- USA Today
Social Security garnishment paused for student loan defaulters
Social Security garnishment paused for student loan defaulters Show Caption Hide Caption Collection of defaulted student loans to resume May 5: What to know Since the pandemic, federal student loan borrowers have been mostly protected from the harshest consequences of defaulting. That's about to change on May 5. The Department of Education paused its plan to garnish Social Security benefits for defaulted student-loan borrowers, a process that was initially set to take effect when the administration restarted student debt collections on May 5. Spokesperson Ellen Keast told USA TODAY in a statement on Tuesday, June 3, that the Department of Education has not offset any Social Security benefits since collections restarted last month. 'The Trump Administration is committed to protecting social security recipients who oftentimes rely on a fixed income,' Keast said in the statement to USA TODAY. 'In the coming weeks, the Department will begin proactive outreach to recipients about affordable loan repayment options and help them back into good standing.' We explain: As millions miss student loan payments, here's how it could hurt the economy The announcement is a reversal for the administration after announcing April 21 that the Education Department's Office of Federal Student Aid would resume collections of its defaulted federal student loan portfolio on May 5, ending a more than five-year pause instituted in March 2020 as part of COVID-era policies. The Department of Education says in a note on its debt resolution page that it is "delaying offsets' of monthly federal benefits, including Social Security, for 'a couple of months and plans to resume sometime this summer." The Department did not provide a more concrete timeline of when collections could resume on Social Security payments in a request sent by USA TODAY. Over 400,000 defaulted borrowers likely receive Social Security: Report As of late April, there were 42.7 million borrowers owing more than $1.6 trillion in student debt, according to the department, with more than 5 million borrowers in default. When borrowers default on their federal student loans, the government can collect the outstanding balance through forced collections, including the offset of tax refunds, as well as the garnishment of wages and Social Security benefits. There are an estimated 452,000 student loan borrowers age 62 and older with defaulted loans who are likely receiving Social Security benefits, the Consumer Financial Protection Bureau said in January. More than one in three Social Security recipients with student loans are reliant on Social Security payments, according to a January report from the bureau, meaning forced collections, if implemented, could 'significantly imperil their financial well-being.' What does it mean to default on student loan payments? Federal student loan borrowers enter default after 270 days of missed payments and are then transferred to the Department of Education's default collections program after 360 days of non-payment. Defaults negatively impact borrowers' credit scores and leave them vulnerable to forced collections. Trump administration tightened student loan debt policies About 195,000 borrowers who haven't paid their student loan bills for at least nine months received a 30-day official notice the week of May 5 from the U.S. Department of Treasury notifying them that their federal benefits checks will be cut in early June. "There's no such thing as forgiveness, just shifting the payment burden from one party to another. We will not force American taxpayers to take on the debts that are not theirs," Department of Education Secretary Linda McMahon said in an X post in late April. "Borrowers should pay back the debts they take on." Kathryn Palmer is a national trending news reporter for USA TODAY. You can reach her at kapalmer@ and on X @KathrynPlmr.
CNBC
3 days ago
- Business
- CNBC
Social Security benefits get reprieve from student loan collections, but paychecks are still at risk
The Trump administration paused its plan to garnish Social Security benefits for those who have defaulted on their student loans — but says borrowers' paychecks are still at risk. "Wage garnishment will begin later this summer," Ellen Keast, a U.S. Department of Education spokesperson, told CNBC. Since the Covid pandemic began in March 2020, collection activity on federal student loans had mostly been on hold. The Biden administration focused on extending relief measures to struggling borrowers in the wake of the public health crisis and helping them to get current. The Trump administration's move to resume collection efforts and garnish wages of those behind on their student loans is a sharp turn away from that strategy. Officials have said that taxpayers shouldn't be on the hook when people don't repay their education debt. "Borrowers should pay back the debts they take on," said U.S. Secretary of Education Linda McMahon in a video posted on X on April 22. Here's what borrowers need to know about the Education Department's current collection plans. Keast said on Monday that the administration was delaying its plan to offset Social Security benefits for borrowers with a defaulted student loan. Some older borrowers who were bracing for a reduced benefit check as early as Tuesday. The Education Department previously said Social Security benefits could be garnished starting in June. Depending on details like their birth date and when they began receiving benefits, a recipient's monthly Social Security check may arrive June 3, 11, 18 or 25 this year, according to the Social Security Administration. More than 450,000 federal student loan borrowers age 62 and older are in default on their federal student loans and likely to be receiving Social Security benefits, according to the Consumer Financial Protection Bureau. More from Personal Finance:What the House GOP budget bill means for your money'Maycember' is over — here's how to recover financiallyCourt order challenges Trump's plan to move student loans to SBA The administration's announcement gives borrowers more time to try to get current, and to avoid a reduced benefit check down the line. "The Trump Administration is committed to protecting Social Security recipients who oftentimes rely on a fixed income," said Keast. The Education Dept. says defaulted student loan borrowers could see their wages garnished later this summer. The agency can garnish up to 15% of your disposable, or after-tax, pay, said higher education expert Mark Kantrowitz. By law, you must be left with at least 30 times the federal minimum hourly wage ($7.25) a week, which is $217.50, Kantrowitz said. Borrowers in default will receive a 30-day notice before their wages are garnished, a spokesperson for the Education Department previously told CNBC. During that period, you should have the option to have a hearing before an administrative law judge, Kantrowitz said. The Education Department notice is supposed to include information on how you request that, he said. Your wages may be protected if you've recently been unemployed, or if you've recently filed for bankruptcy, Kantrowitz said. Borrowers can also challenge the wage garnishment if it will result in financial hardship, he added.
Yahoo
3 days ago
- Business
- Yahoo
Education Department pauses Social Security garnishments for defaulted student loans
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.
Yahoo
3 days ago
- Business
- Yahoo
Student Loans: Ed Dept pauses plan to garnish Social Security checks
(NewsNation) — The Trump administration has paused a plan to garnish the Social Security checks of those who have defaulted on their student loans, an Education Department official told NewsNation on Monday. '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,' Ellen Keast, a department spokeswoman, said in a statement to NewsNation. The announcement will come as welcome news to hundreds of thousands of older Americans with defaulted student loans, after the Education Department warned in May that federal benefits would be subject to offset as soon as this month. Social Security plans to add AI to phone systems: Reports In May, the Education Department resumed involuntary collections on defaulted federal student loans for the first time since March 2020. As part of that process, hundreds of thousands of older borrowers were expected to be at risk of having their Social Security checks garnished. But on Monday, Keast said Social Security offsets have been paused, and that the Trump administration is 'committed to protecting social security recipients.' '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. This year, an estimated 452,000 people aged 62 and older had student loans in default and were likely to experience the renewed forced collections, according to a January report from the Consumer Financial Protection Bureau (CFPB). Social Security increase missing? Here's what to do The Education Department did not say whether the garnishment pause applied only to Social Security benefits or also to other federal benefits. NewsNation has asked for clarification. The Social Security Administration (SSA) did not respond to NewsNation's request for comment. When the Education Department initially announced the restart of involuntary collections, it warned that the Office of Federal Student Aid (FSA) would begin administrative wage garnishment 'later this summer' after sending required notices. Last month, a federal judge blocked the Trump administration's plan to move the $1.6 trillion student loan portfolio to the Small Business Administration, keeping the Education Department in charge of managing those loans, CNBC reported. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
