U.S. Social Security beneficiaries behind on their student loan payments could face up to a 15% reduction in their benefits starting next month. It comes as the Trump administration recently reinstated the Treasury Offset Program (TOP), suspended during the COVID-19 pandemic.
The TOP program allows the federal government to withhold funds from payments such as tax refunds, federal salaries, and social security benefits to repay debts.
According to the Department of Education, nearly 200,000 borrowers started receiving official 30-day notices from the Treasury Department regarding the resumption of the debt collection program. Recipients of a TOP notice should also receive information about how to challenge the collections if they can prove financial hardship or have a pending loan discharge.
June marks the first monthly benefit checks subject to the involuntary collection, once the 30-day notice period concludes. All 5.3 million defaulted borrowers are expected to receive notices that their earnings will be subject to administrative wage garnishment by end of summer.
Student loan debt in the U.S. stood at around $1.8 trillion as of 2024. In a statement on the restart of TOP, Secretary of Education Linda McMahon said “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.” However, critics of the move say the administration is cracking down on the wrong demographic. Those opposed to the involuntary collection program stressed the GOP’s plan to further tax breaks to the rich alone would add an additional $5.7 trillion to the nation’s deficit in the next decade.
A report from the Consumer Financial Protection Bureau warned that forced collections could push older borrowers into poverty, undermining the purpose of the Social Security program.
