Social Security garnishment for defaulted student loans is paused
The Trump administration says it's pausing the garnishment of Social Security benefits for student loan borrowers who have defaulted.
That means a temporary pause on a decision announced in April to restart collections on student loans in default. On May 5, the restart policy was put into action when the Education Department began involuntary collections through the Treasury Department's offset program, which claws back overdue debts by garnishing federal payments such as tax refunds and Social Security checks.
The halt comes after the Trump administration last month retreated from another type of Social Security benefit clawback, when it announced it would only take 50% of a person's monthly check to recover overpayments, down from a previously announced 100%. In that case, advocates for senior citizens had expressed concern that the policy would lead to hardship, given that one-third of Social Security recipients rely on their monthly benefit check for at least 75% of their income.
In a statement emailed to CBS MoneyWatch, the Education Department said it hasn't offset any Social Security payments because of student debt since it resumed collections on May 5.
The department "has put a pause on any future Social Security offsets," spokeswoman Ellen Keast said in the email.
She added, "The Trump Administration is committed to protecting Social Security recipients who oftentimes rely on a fixed income. In the coming weeks, the Department will begin proactive outreach to recipients about affordable loan repayment options and help them back into good standing."
While most people may think of student borrowers as recent grads who are juggling loan repayments with other living expenses, there are about 3.6 million people over 60 who carry student loan debt, according to Bankrate.
About 452,000 people over 62 — the earliest age when one can collect Social Security benefits — have defaulted on their student loans, the Consumer Financial Protection Bureau said earlier this year.
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
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