The good news didn’t last long: Social Security checks will once again be garnished for unpaid student loans starting this summer
Earlier this year, the White House announced plans to garnish Social Security benefits from those delinquent on their student loan payments. This plan was part of a broader initiative to begin collecting student loans that had been largely in forbearance since the pandemic.
How many seniors could be affected?
An analysis by the Consumer Financial Protection Bureau published in January found that approximately 452,000 people aged 62 and older are delinquent on their student loans and receiving Social Security benefits.
The agency, which has been gutted under the Trump administration, warned that over the last two decades, the number of retirees forced into collections has grown by a staggering 3,000 percent.
“Between 2001 and 2019, the number of Social Security beneficiaries experiencing reduced benefits due to forced collection increased from approximately 6,200 to 192,300,” reported the CFBP.
The agency’s analysis of student loan debt revealed a concerning trend: from 2017 to 2023, the number of beneficiaries aged 62 and older facing benefits garnishment increased by 59 percent, rising from 1.7 million to 2.7 million.
While saving for retirement through taxes paid to the Social Security Administration, private accounts, or pensions is an important step, the reality of being able to afford retirement is significantly complicated by indebtedness.
When will the federal government begin garnishing Social Security benefits?
On Wednesday, June 4, Ellen Keast, a spokesperson from the Department of Education, confirmed to CNBC that “garnishment will begin later this summer.” The SSA began distributing Social Secuirty and Supplemental Secuirty benefits on June 3, and those checks were not subject to garnishment, as the agency had previously warned they would be.
The first round of Social Security benefit payments was made to individuals who have been receiving benefits since before May 1997, as well as those who also receive SSI benefits.
No exact dates have been specified, but whenever garnishment does kick in, Social Security beneficiaries could see up to 15 percent of their check seized by the federal government.
Can SSI benefits be garnished to repay delinquent student loans?
No. Unlike Social Security, the federal government cannot garnish Supplemental Security Income (SSI) benefits. However, in cases of overpayment, SSI benefits may be reduced until the overpaid amount is repaid, unless the recipient opts to pay the full amount upfront. While the Trump administration announced that overpayments for Social Security would be repaid by withholding 100 percent of the benefits until the amount was returned, SSI benefits continue to have a repayment rate of 10 percent per month.
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