Your Social Security Benefits Won't Be Garnished if Your Student Loans Are in Default -- for Now

The Trump administration paused its plan to garnish Social Security benefits for defaulted federal student loans. 

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In another recent turn of student loan news, the Department of Education announced it would pause wage garnishment efforts on Social Security benefits for borrowers whose loans are in default. 

In April, the Department of Education warned borrowers whose student loans were in bad standing that wage garnishment efforts would begin this summer. A borrower's tax return or up to 15% of their paycheck or Social Security benefits could be withheld.

Monday evening's announcement came just hours before June's first round of Social Security checks were deposited. Checks are expected on June 3, 11, 18 and 25 -- depending on your birthday. If your student loans are in default, you should expect to get your full payment.

However, Mark Kantrowitz, a student loan and financial aid expert, says that the pause could only be temporary. "Borrowers are still at risk of having Social Security disability and retirement benefit payments offset in the future," Kantrowitz said.

For now, the federal government can still offset your paycheck or income tax refund if you have defaulted student loans. Here's what you can do to hopefully avoid garnishment and get your student loans in good standing. 

What you can do if your student loans are in default

If your loans are in default, Kantrowitz said that it's still very likely that the Department of Education will reverse the pause because it's the Treasury Offset Program's most effective way of collecting defaulted student loans. So it's best to take action sooner rather than later. 

"The US Department of Education may have paused the Social Security offsets because it conflicts with the administration's assertions that they aren't cutting Social Security," he said. 

Borrowers in default have options. You could consider loan rehabilitation, where you'll make nine consecutive on-time payments to get out of default, or loan consolidation, which can help you get your loans onto an income-driven repayment plan, potentially lowering your monthly payment. To explore all of your options, contact the US Department of Education's Default Resolution Group.