Beginning next month, Social Security beneficiaries who are behind on their student loan payments may face up to a 15% reduction in their benefits. Earlier this month, the Trump administration reinstated the Treasury Offset Program (TOP), which had been suspended during the COVID-19 pandemic. This program allows the federal government to withhold funds from payments such as tax refunds, federal salaries, and Social Security benefits to repay debts. According to Newsweek, up to 15% of Social Security benefits can be offset to repay defaulted federal student loans, with the condition that the benefits check does not drop below \$750. The Department of Education announced that approximately 195,000 borrowers have started receiving official 30-day notices from the Treasury Department regarding the use of TOP. By early June, once the 30-day notice period concludes, the first monthly benefit checks subject to the offset are scheduled. By the end of the summer, all 5.3 million defaulted borrowers are expected to receive notices that their earnings will be subject to administrative wage garnishment. A report from the Consumer Financial Protection Bureau warned that forced collections could push older borrowers into poverty, undermining the purpose of the Social Security program. CNBC reported that the 15% offset is calculated from the total benefit before any deductions and includes both retirement and disability Social Security benefits. Borrowers in default who receive a TOP notice should also receive information about how to challenge the collections if they can prove financial hardship or have a pending loan discharge. — new from MassLive
