Starting next month, Social Security beneficiaries who have fallen behind on their student loan payments face up to 15% garnishment of their payments.
Earlier this month, the Trump administration announced student loan borrowers in default will be once again subject to the long-halted Treasury Offset Program (TOP).
TOP is a collections process which allows the federal government to withhold money from payments such as tax refunds, federal salaries, social security and other benefits to pay off debts owed.
TOP was suspended at the start of the COVID-19 pandemic for delinquent student loan borrowers, and was not reactivated throughout the Biden administration for this group.
According to Newsweek, TOP can offset up to 15% of Social Security benefits to pay back defaulted federal student loans, though, the benefits check cannot go lower than $750.
In its May 5 announcement, the Department of Education (DOE) said about 195,000 student loan borrowers in default have started receiving official 30-day notices from the Treasury Department about the use of TOP.
DOE indicated the first monthly benefit checks subject to the offset are scheduled for early June, once the 30 day notice window elapses.
By the end of the summer, DOE added that “all 5.3 million defaulted borrowers will receive a notice from the Treasury that their earnings will be subject to administrative wage garnishment.”
There are about 2.9 million people nationwide who are 62 or older owing federal student loans as of early 2025, CNBC reported, citing DOE data.
A Consumer Financial Protection Bureau report from early January noted an estimated 452,000 borrowers in this category are likely to experience forced collections on their Social Security benefits.
That report also warned that forced collections “can push older borrowers into poverty, undermining the purpose of the Social Security program.”
CNBC reported that the 15% offset is calculated from the total benefit before any deductions and that it encompasses both retirement and disability Social Security benefits.
Borrowers in default who receive a TOP notice from the DOE should also receive information about how to challenge the collections if they can prove they are experiencing financial hardship or have a pending loan discharge, CNBC added in its report.