Q: Can Social Security be garnished for student loans?

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Social Security benefits can be garnished by the federal government for federal student loan debt that's in default. Supplemental Security Income payments (SSI) however, cannot be garnished for defaulted federal loans.

In addition to garnishing your Social Security checks, the Department of Education and its debt collectors can also offset your tax refund and garnish your wages. They cannot, however, take money from your bank account for a defaulted student loan — at least not without getting a court order first.

Private student loans cannot garnish your Social Security payments for a defaulted loan.

You can stop a Social Security garnishment by getting your loans out of default either by:

Click here to read How to Get Out of Student Loan Default

The Social Security Administration can also offset your benefit payments to pay child support, alimony, and federal taxes. Last year, a senator introduced the "Protection of Social Security Benefits Restoration Act" to stop Social Security garnishments. So far, that bill has gone nowhere.

How much can Social Security be garnished for student loans?

The Department of Education can garnish the lesser of:

  • 15% of a Social Security recipient's monthly Social Security payment offset or
  • the amount by which their monthly payment exceeds $750.

Here's an example of how this works.

Let's say you're an older American. The Social Security Administration sends you $850 month for your disability payment. The amount that can be garnished is the lesser of $127.50 (15% of $850) or $100 (the amount by which $850 exceeds $850). In this example, $100 will be taken from your Social Security check to repay your defaulted student loans.

Here's one more example. Let's say your monthly Social Security income is $1250. The amount that is offset is the lesser of $187.50 (15% of $1250) or $500 (the amount by which $1250 exceeds 750). In this example, $187.50 will be taken from your check to repay your federal student debt.

Can the federal government withhold VA disability compensation for federal student loans?

The government cannot withhold money from your VA disability compensation to repay defaulted student loans. Veterans benefits, benefits under Part C of the Black Lung Act, and tier 2 Railroad Retirement Benefits are all exempt from garnishment.

Can the garnishment of Social Security benefits be reduced for hardship?

Depending on your personal finances, you can ask the Department of Education to grant you a full or partial reduction of your garnishment based on financial hardship.

To request a reduction, you typically have to submit:

  • a completed Statement of Financial Status;
  • proof of household income and expenses (living expenses, medical bills, credit card debt, etc.)
  • a copy of the notification of offset (you can get this from the Treasury Department's Bureau of the Fiscal Service)

It usually takes about 6-8 weeks to get a decision.

In my experience, it's usually much easier to lower a benefit offset than it is to get back an income tax refund offset for student loan debt.

Loan forgiveness for retirees and the elderly

In a recent report, Snapshot of Older Consumers and Student Loan Debt, the Consumer Financial Protection Bureau (CFPB) noted that more and more Americans 62 and over are carrying massive student loan debt. Unfortunately, no laws have been passed to help.

As it stands, there are no specific student loan forgiveness programs for retired or elderly Americans.

The best options for forgiveness are for student loan borrowers who make 20 to 25 years of payments under an income-driven repayment plan or work for a qualified public service employer.

Other than that, your federal student loans will follow you to the grave.

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