Social Security Checks at Risk as Student Loan Collections Resume

The Hidden Crisis: Seniors Facing Student Loan Collections on Social Security Benefits

Christine Farro has already cut back on everything possible. At 73, she shops only at thrift stores, grows her own vegetables, and has reduced gifts for her grandchildren. She’s even postponed vet care for her beloved pets. Despite these sacrifices, her carefully managed Social Security benefits face a new threat from student loan collections.

“I worked ridiculous hours – weekends and nights. But I could never pay it off,” shares Farro, a retired child welfare worker from Santa Ynez, California who relies on her Social Security retirement benefits.

Like many Americans with federal student loans, Farro benefited from a five-year pause on payments during the pandemic. Sadly, that relief period ended in 2023. Now, the Department of Education will restart “involuntary collections” – taking money from paychecks, tax refunds, and Social Security benefits. For Farro, who previously experienced Social Security garnishment for student loans, the financial strain will soon return.

Decades-Old Debts Return to Haunt Social Security Recipients

Farro’s student loan struggles began 40 years ago. As a single mother studying developmental psychology, she hoped education would provide stability. When her salary couldn’t cover loan payments, she pursued a master’s degree, hoping for better income. Unfortunately, her earnings never matched her growing debt.

Around 2008, after consolidating her loans, she paid $1,000 monthly. Years of missed payments and compounding interest grew her debt to $250,000. When she reached out for assistance, the response was heartbreaking.

“They said, ‘Move to a cheaper state'” recalls Farro, who lives in a 400-square-foot casita rented from a friend. “I realized I was living in a different reality than they were.”

The Troubling Growth of Senior Student Debt Affecting Social Security

Student loan debt among older Americans has increased dramatically, partly due to rising tuition costs forcing more people to borrow larger amounts. Americans 60 and older now hold about $125 billion in student loans – six times more than 20 years ago, according to the National Consumer Law Center.

This crisis has led to a shocking 3,000% increase in Social Security beneficiaries facing garnishment between 2001 and 2019, according to the Consumer Financial Protection Bureau (CFPB).

This year alone, approximately 452,000 people aged 62 and older have student loans in default and will likely face forced collections from their federal benefits, a January CFPB report shows.

Living on the Edge: When Social Security Gets Garnished

Debbie McIntyre, 62, teaches adult education in Georgetown, Kentucky. She dreams of retirement, writing historical fiction, and taking her first plane trip since high school. Sadly, her reality is quite different – her husband has been on Social Security disability for twenty years, they use credit cards to cover expenses, and their rent is increasing by $300.

If her paycheck gets garnished, McIntyre worries about their survival.

“I don’t know what more I can do,” she confesses, too afraid to check her current loan balance. “I’ll never get out of this hole.”

Braxton Brewington of the Debt Collective notes how many older Americans participate in their organization. Many should have qualified for student loan forgiveness but fell victim to a system “riddled with flaws and illegalities.” Numerous seniors have repaid their original loan amounts, sometimes several times over, yet still owe more due to interest and fees.

For those facing Social Security garnishment for student loans, the consequences can be devastating:

• skipping meals to make ends meet
• Diluting medication or cutting pills in half
• In extreme cases, becoming homeless

Collections might have resumed regardless of who was president, though the Biden administration had proposed limiting garnishment amounts. Federal law currently protects just $750 of monthly Social Security benefits – far below the poverty line.

“We’re basically providing people with federal benefits with one hand and taking them away with another,” says Sarah Sattelmeyer of New America think tank.

Linda Hilton, a 76-year-old retiree from Arizona, experienced garnishment before COVID and is preparing for its return. She’ll manage, but the small joys of retirement will disappear.

“It’s going to mean restrictions,” Hilton says. “There won’t be any travel. There won’t be any frills.”

Policy Questions and Uncertain Futures for Social Security Recipients

Some borrowers have already received collection notices, while many others live in fear. President Donald Trump has signed an order to dismantle the Department of Education, and layoffs have made it harder for borrowers to get information about their loans and how they might affect Social Security eligibility.

While Education Secretary Linda McMahon calls restarting collections necessary “for their own financial health and our nation’s economic outlook,” even some Trump supporters question a policy that will make calculating their Social Security benefits more difficult.

Randall Countryman, 55, from California, supported Trump but wishes the government would make case-by-case decisions on student debt. He believes many Americans don’t realize how many older people struggle with student loans affecting their Social Security.

“What’s a young person’s problem today,” he reflects, “is an old person’s problem tomorrow.”

Countryman began his degree while incarcerated, continuing at the University of Phoenix after release. Growing concerned about mounting debt, he never finished. Finding work has been complicated by his criminal record.

Now living on his wife’s Social Security and his mother-in-law’s help, he worries about how they would manage if the government demands repayment.

“I kind of wish I never went to school in the first place,” he admits.