Retirees who defaulted on their student loans may have the money taken out of their Social Security checks.
In March 2020, at the start of the COVID-19 pandemic, the first Trump administration stopped collecting on student loan debt.
This pause lasted until October 2023, when Joe Biden was president. But the Biden administration refused to collect on borrowers who defaulted, giving them room to breathe.
Now the Trump administration is sucking the air out of the room.
Earlier this month, the Department of Education began collecting on defaulted student loan debt. Borrowers must make payments or risk the federal government coming after their Social Security checks.
Although most student loan borrowers are of working age, nearly 3 million are 62 or older. Some 452,000 of them were in default.
One way the Trump administration will come after borrowers who default is by withholding tax refunds. Another way is by garnishing Social Security payments. This is part of a federal collections program.
Retirees who rely on Social Security and default on their student loan payments may see smaller Social Security payments.
Federal law allows Social Security benefits above $750 per month to be garnished. That monthly amount ($9,000 a year) would put a person below the federal poverty level ($15,650 per year for one person).
Why is that unfair, you might be wondering? If you took out a loan, shouldn’t you repay it?
Yes, but many student loan borrowers, especially those nearing retirement, have been paying back their loans for decades. They’ve paid the principal loan amount many times over, but keep falling behind because of high interest and fees.
Biden tried to help many of these borrowers through a loan forgiveness program. But the Supreme Court struck it down in 2023.
Seniors with student loan debt will have to make payments or risk losing their hard-earned Social Security benefits. And they’re unlikely to get any sympathy from this White House.