Retiree Alert: How to Reduce or Stop a Social Security Student Loan Garnishment
April 8, 2013

When you hear about the student loan debt bubble and the trillion dollars of educational debt, you tend to think of recent college graduates and 20 and 30 something’s getting their careers started. But in fact, a great many student loan debtors are older Americans – many of them are even retired. And of the many that are retired and subsisting on Social Security, too many are seeing their limited income hit for student loan deductions.

More than 115,000 retirees are subject to Social Security garnishment for their student loans. A little over a decade ago, in 2000, there were just six people being garnished for delinquent student loans! That’s what – a gazillion percent increase in the number of fixed-income seniors being tapped for student loan debt?

The government can take up to 15% of your student loan debt to cover the retiree’s student loans or student loans they co-signed for a child or grandchild. The number of seniors hit with student loan garnishments will continue to rise as those in debt age – it’s statistically unavoidable – and tragic.

Here’s what you need to know about student loan garnishment of your Social Security benefits:

#1 Only federal student loans can result in garnishment. If you are retired and living on Social Security, private student loan lenders will have no recourse to dig into your SS benefits.

#2 The garnishment will be the lesser of 15% or the difference between your benefit and $750. If you get $800 in benefits, 15% is $120, but you can’t be at less than $750, so the most they can take is $50.

#3 Other payments, such as VA benefits, railroad retirement and department of education benefits, are exempt from garnishment. 

Here’s what you can try to do to fight student loan garnishment of your Social Security benefits:

#1 When you first get notice of a student loan garnishment to hit your benefits, you’ll have some heads up. As soon as you get the notice, you have 20 days to request a review. Do it without delay! But don’t panic – if you miss this window, you can always request a review at any time.

#2 Apply for a hardship exemption to the garnishment. You have to submit this detailed form and explain why the deduction creates a hardship. For instance, if you have medical expenses and medication or other necessary costs that you would not be able to afford if the garnishment goes forward or continues.

#3 Contact the Department of Education and find out how you can get your loan out of default. You may be able to make a few payments and then apply for income based repayment. If you can get access to an income based repayment plan, your payments will likely drop to close to zero or zero. Even if you have to sacrifice (or borrow) to make enough payments to qualify for this option, it will be your best bet in the long run.

#4 Contact the Department of Education to find out if you can consolidate your loans to get out of default. It’s possible to consolidate to get out of default and then immediately apply for an income based repayment plan. 

Until Congress wakes up and recognizes that student loan debt is crippling those already living on the ragged edge of our economy and does something to make it better, the best we can hope for is to muddle through. If you have student loans, try’s free student loan management tool to optimize your debt, review repayment options and contact your lenders.