Social Security for students: Many older Americans who depend on Social Security may start getting smaller monthly payments soon. If they haven’t paid their federal student loans, the government could take money from their Social Security checks.
This might begin as early as June. The White House has started up an old program again that was paused during the pandemic. It lets the government take money straight from Social Security payments if a person has not paid their loans. They can take up to 15% of a person’s benefit, but they can’t leave someone with less than $750 each month.
Student loans debt
More than 2.9 million people right now who are 62 or older still owe money on student loans. That number has grown a lot more than 70% since 2017. Reports show over 450,000 of them are already in default. That means they have not paid their loans in a long time, and now the government can act to get the money back.
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The law says that before the government starts taking money, they must send out a letter to let the person know. This notice says the offset will begin in 65 days, and it also mentions the person’s credit might be hurt. But this notice only goes out once. If someone already got that letter before the pandemic, they might not get a new one now.
Collections Restarted After Pandemic Pause
The government has been using this collection method for over 20 years. It wasn’t something new. But they stopped it for a while to help people who were having a hard time during COVID. Now, collections started again on May 5. That means the first Social Security cuts could show up in June.
Loan experts say once a person has not made payments for 270 days, they are considered in default. At that point, the loan is sent to a collection agency. The agency then works with the government to get the money by using tough steps like garnishing wages or taking money from Social Security.
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The Department of Education hasn’t said if they will send out more warning letters or change how the program works. But people who got a notice before COVID won’t get another one now, even though payments might still be taken.
This means seniors who owe federal student loans and are behind on payments need to be aware. Their benefits could shrink unless they take steps to fix the loan default or set up a payment plan.
