More older Americans are carrying student loan debt than many people realize, sometimes their own from decades ago, often loans taken out for a child or grandchild. If those federal loans are in default, the government can take part of your Social Security to pay them back.
That practice was paused for much of the past year and a half. Now the Education Department is gearing up to restart collections on defaulted loans, with private debt collectors possibly starting as soon as November. Here’s what retirees and people on disability need to know.
How the offset works
When a federal student loan goes into default, usually after about 270 days of missed payments, the government can collect through the Treasury Offset Program. That includes taking money from Social Security:
- up to 15% of your monthly retirement or disability (SSDI) benefit
- but it can’t drop your benefit below $750 a month, a floor set in 1996 that has never been raised for inflation
For example, on a $1,500 benefit, the most that could be taken is $225 a month. On a $850 benefit, only $100 could be taken, because the rest is protected by the $750 floor.
Who’s protected
- SSI recipients: Supplemental Security Income can’t be offset for student loans.
- Veterans’ benefits aren’t subject to this offset.
- Private student loans can’t take Social Security this way. This only applies to federal loans.
Where things stand
Social Security offsets for student loans were halted in June 2025, and broader collections were paused while a new repayment plan was set up. That plan, the Repayment Assistance Plan, launched in July 2026. Now the Education Department is moving to restart collections. A pause was never forgiveness. Loans stayed in default, and interest kept building.
An earlier estimate from the Consumer Financial Protection Bureau found roughly 452,000 borrowers aged 62 and over with defaulted loans who likely get Social Security.
You should get a warning first
Before any offset, you should get a written notice by mail at your last known address. You then have 30 days to respond, for example to ask for a hardship review or challenge the debt. If you send everything within that window, the offset is usually put on hold while it’s reviewed.
How to stop it or avoid it
- Rehabilitation: Make nine affordable, on-time monthly payments over about 10 months. It takes the loan out of default and removes the default from your credit report.
- Consolidation: Combining defaulted loans into a new Direct Consolidation Loan can stop collections in roughly one to three months. But it can limit your repayment options, especially for Parent PLUS loans.
- Hardship review: If losing part of your benefit would leave you unable to cover basics, contact the Education Department’s Default Resolution Group at 1-800-621-3115 or myeddebt.ed.gov within the 30-day window.
- Disability discharge: If you’re totally and permanently disabled, including many people getting SSDI, you may qualify to have your federal student loans wiped out entirely. It’s worth checking before anything else.
What to do now
- Find out if you’re in default. Log in at studentaid.gov to see all your federal loans and their status.
- Update your address with your loan servicer and on studentaid.gov, so you don’t miss the warning letter.
- Act early. It’s much easier to sort out a plan before money starts coming out of your check.
- Watch for scams. No legitimate company needs an upfront fee to help with federal student loans. Everything above is free through the Education Department.
Sources: Forbes (October 19, 2026), Student Loan Sherpa and studentaid.gov.
Jackson is a dedicated USA news writer, who covers important topics such as Social Security payment schedules, COLA increases, IRS tax refunds, stimulus payment announcements, Medicare eligibility, retirement benefits, and changes to state driving laws. His goal is to provide clear, informative, and easy-to-follow articles that help retirees, seniors, taxpayers, and American families stay informed.