The Trump administration will not garnish Social Security benefits for nearly half a million elderly borrowers in default on federal student loans.
The Department of Education announced plans in April to resume collections on defaulted student loans. President Donald Trump paused student loan collections in response to the COVID-19 outbreak in 2020, and former President Joe Biden maintained that pause through his term in office.
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The government can legally garnish federal benefits for any borrowers in the rear, typically withholding roughly 15% from payments to beneficiaries, but Trump administration officials say they plan to extend alternative repayment options to more than 450,000 Social Security beneficiaries who are behind on payments.
“The Department has not offset any social security benefits since restarting collections on May 5, and has put a pause on any future social security offsets,” Department of Education spokeswoman Ellen Keast told the Washington Examiner. “The Trump Administration is committed to protecting social security recipients who oftentimes rely on a fixed income. In the coming weeks, the Department will begin proactive outreach to recipients about affordable loan repayment options and help them back into good standing.”
Trump officials declined to outline repayment options they plan to offer affected borrowers.
CNBC reported the administration’s policy shift Tuesday night, with the Education Debt Consumer Assistance program director, Carolina Rodriguez, cautioning the resumption of collections on defaulted loans.
“Losing a portion of their Social Security benefits to repay student loans could mean not having enough for food, transportation to medical appointments, or other basic necessities,” she told CNBC.
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Trump has outlined his plans to dissolve the Department of Education. That includes plans to shunt federal student loan oversight to the Department of the Treasury, and multiple Republican lawmakers have already introduced legislation toward that goal.