The federal government is restarting efforts to collect defaulted student loans, and many retirees who rely on Social Security benefits could see their checks reduced starting in June. The Treasury Offset program allows the government to garnish up to 15% of a borrower’s Social Security benefits if they have defaulted on their federal student loans, although the benefits cannot be reduced to less than $750 per month. According to recent data, Americans aged 50 and above collectively owe the government $125 billion in student loan debt, with approximately 452,000 borrowers aged 62 and older having defaulted on their loans.
Some had borrowed for their own education, while others took out Parent PLUS loans to support their children. These seniors risk losing part of their Social Security income to repay defaulted loans. Experts warn that the return of aggressive collection tactics will have severe consequences for retirees, rendering many unable to afford basic needs such as food, medical care, and other expenses.
This is especially true for those who rely solely on Social Security benefits. Additionally, some retirees may not receive new notifications about the planned garnishment and might be caught unaware.
Retirees face Social Security garnishment
If you are at risk of having your Social Security benefits garnished in June, there are a few steps you can take:
1. Identify your loan servicer by visiting the Federal Student Aid website or calling the Federal Student Aid Information Center. 2.
Discuss options with your loan servicer and find out if you qualify for deferment or forbearance, income-driven repayment plans, or loan rehabilitation, which can remove your loan from default and halt garnishments. The widespread student loan debt among retirees is tied to the rising cost of higher education over recent decades. Many Americans have had to seek federal loans as the only option to help themselves or their children earn a degree.
If you are wondering if your Social Security check could be smaller in June and you have defaulted student loans, the answer could be yes. However, do not wait until your checks are reduced. Take action now to find out where you stand and explore the options available to protect your Social Security income, which is crucial for your financial stability in retirement.