Trump Administration Plans to Reinstate Social Security Deductions as Early as Summer - Could Your Payments Decrease?
In the United States, a significant number of senior citizens are grappling with the repercussions of student loan debt, and the way it intersects with their Social Security benefits.
According to recent data, approximately 16.3 million of the 22 million people receiving Social Security income were aged 65 and over. This demographic, however, is seeing an increase in the number of individuals carrying federal student loan debt. Between 2017 and 2023, the number of borrowers aged 62 and older who have federal student loans increased by 59%, from 1.7 million to 2.7 million.
Delinquent federal student loan borrowers receiving Social Security benefits may face potential debt collection actions. These actions could result in the offset or withholding of part of their Social Security benefits when the repayment of student loans resumes. Seniors in this situation have two legal options to waive or reduce their liability: total and permanent disability (TPD) discharge and financial hardship exemption.
The TPD discharge allows individuals with qualifying disabilities to completely waive their federal student loan repayment obligations. To qualify, applicants must submit an application and provide documentation from a medical professional certifying they're unable to 'engage in substantial gainful activity.' The Department of Education has automated this eligibility and the federal student loan cancellation process for beneficiaries who become disabled before reaching their full retirement age.
For those who become disabled after reaching their full retirement age, responsibility for the TPD application process falls entirely onto them. On the other hand, to qualify for a financial hardship exemption, borrowers need to prove to the Department of Education that their documented income, less the 15% garnishment rate, would be lower than their qualified expenses.
It's worth noting that 82% of the 452,000 Social Security recipients currently in default would qualify for a financial hardship exemption. However, very few seniors apply for this exemption or even know it exists, representing a missed opportunity for delinquent federal student loan borrowers to potentially reduce what they owe.
The Consumer Financial Protection Bureau estimates that 452,000 of these aged borrowers are currently delinquent on their federal student loan(s) and receiving a Social Security benefit. The Donald Trump administration instituted a garnishment rate on Social Security income of 50% until the overpayment has been satisfied. The Department of Education announced a pause in the expected restart of garnishments at a 15% monthly rate for these 452,000 delinquent federal student loan borrowers, but this pause is only temporary and will resume sometime this summer.
The impact of student loan debt on seniors is far-reaching. If Social Security didn't exist, the poverty rate for retirees would jump nearly fourfold to an estimated 37.3%. In 2023, an estimated 22 million people were pulled above the federal poverty line by their Social Security income.
As of April 2025, approximately 42.7 million Americans owe the federal government $1.6 trillion in outstanding federal student loans. The growing number of senior citizens carrying student loan debt is a concerning trend that underscores the need for increased awareness and support for this vulnerable population.
