Trump Policy Reinstates Social Security Benefits Seizure For Defaulted Student Loans
For older Americans with defaulted student loans, the resumption of student loan garnishment by the federal government could drastically cut their Social Security benefits, potentially leaving them with just $750 per month to live on. While a Biden-era rule had shielded a larger portion of Social Security benefits from seizure, the Trump administration has reverted to a decades-old garnishment policy that lowers the protected amount significantly.
Under President Joe Biden, defaulted student loan borrowers on Social Security were poised to be protected up to 150% of the federal poverty line, about $1,883 per month, from garnishment. However, President Donald Trump’s Education Department has rolled back that safeguard, reverting to the bare minimum exemption of $750 per month, a level set in 1996 that has never been adjusted for inflation. This policy change, confirmed by the administration to MarketWatch, means that any Social Security income above $750 can now be taken to repay defaulted student debt, putting financially vulnerable seniors at risk of severe hardship. According to the Consumer Financial Protection Bureau, roughly 452,000 Americans age 62 and older with defaulted student loans could see a portion of their retirement income seized, potentially leaving many with only the $750 floor in monthly retirement income.
Trump Administration Reverses Biden-Era Social Security Benefits Protections
Federal student loan collections had been paused for five years during the pandemic, but that relief ended soon after President Trump took office in 2025. On May 5, 2025, the Education Department officially resumed collections on defaulted loans, including tax refund offsets, wage garnishment of paychecks, and the seizure of Social Security benefits for the first time since 2020.
In the final months of Biden’s term, Under Secretary of Education James Kvaal had drafted a policy to expand the protection of Social Security checks dramatically. Kvaal wrote that borrowers should be able to protect a “reasonable and appropriate amount” of their benefits, specifically $1,883 per month in most states, from offset after default, according to NASFAA. That would have been a significant increase from the longstanding $750 exemption. Kvaal noted in the NASFAA article that this higher threshold would be updated annually with inflation and estimated that the change “will halt Social Security offsets for more than half of affected borrowers” while reducing the offset amount for many others. In other words, most seniors who would otherwise have their benefits garnished might have been spared under the Biden-era plan.
However, the incoming Trump administration chose not to implement Kvaal’s proposal. Instead, it restored the much lower garnishment floor. By reverting to the 1996-era policy, the government can again withhold up to 15% of a defaulted borrower’s Social Security check each month, so long as at least $750 is left untouched. The Biden administration’s broader borrower protections, which would have kept seniors’ entire Social Security benefit above the poverty line, have effectively been undone.
Inflation Has Eroded The Value Of $750 Social Security Benefits Garnishment Floor
The $750-per-month garnishment floor was set nearly three decades ago, and its real value has eroded dramatically over time. In 1996, $750 exceeded the monthly poverty threshold for a single person; today, $750 is about $400 below the poverty line. Put another way, what was once a modest safeguard above subsistence level is now an extremely low floor that virtually guarantees poverty for those left living on it. Had the $750 exemption kept pace with inflation since 1996, it would be roughly $1,450 monthly today. Instead, the protected amount has remained frozen, even as the cost of living has climbed considerably.
This real-value erosion means the federal poverty line has overtaken the garnishment floor. The current U.S. poverty guideline for one person is about $1,255 per month (approximately $15,000 annually), well above the $750 that defaulted borrowers must be left with. The CFPB points out that the statute’s $750 protection “has not been adjusted for inflation since 1996” and fails to prevent hardship. Today, the minimum protected income is so low that even if a borrower’s benefits are only at the poverty level, they can still be partially taken, pushing them below the poverty line.
Even critical safety-net programs recognize that $750 is insufficient; the federal Supplemental Security Income benefit for low-income seniors and disabled individuals is $914 per month in 2024, which is still higher than the amount student loan garnishment rules would leave behind. In short, older borrowers subject to this policy are left with an increasingly meager sum to meet their needs.
The resumption of Social Security garnishment also comes on the heels of the Fresh Start initiative, a temporary program that had given defaulted borrowers a chance to regain good standing. That program expired in late 2024, and borrowers who did not enroll in it or an income-driven repayment plan are now in default and subject to collections. During the Biden administration, officials tried to steer distressed borrowers toward solutions like affordable repayment plans or loan forgiveness opportunities (for example, Public Service Loan Forgiveness or disability discharges) to prevent default. Those efforts and the pandemic pause significantly reduced the number of seniors facing offsets.
Lawmakers and consumer groups are now pressing for solutions to shield older borrowers from the worst effects of this policy. In Congress, Representative Ayanna Pressley (D-MA) and Senator Cory Booker (D-NJ) have introduced legislation to suspend garnishments of wages, tax refunds, and Social Security for student loan debt. “No one should have their hard-earned wages, tax refunds, and Social Security checks seized by Donald Trump,” Pressley said in a statement announcing the bill, condemning the administration’s “shameful garnishment tactics.” Whether such measures gain traction remains to be seen.
Why Seizing Social Security Benefits Over Student Loans Could Spark Backlash
In the meantime, tens of thousands of older Americans are once again at risk of living on as little as $750 a month because of student loan debt. Every dollar taken from a Social Security check is less for groceries, medicine, or utility bills. The debate ultimately centers on what is the bare Social Security benefits floor for seniors. And right now, for many older student loan borrowers in default, that difference amounts to more than $1,100 monthly.
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