Here are the legal ways retirees can avoid Social Security garnishment this summer

For millions of retirees across the United States, Social Security benefits are essential to daily survival. The program kept more than 22 million Americans above the federal poverty line in 2023, including over 16 million seniors.

In fact, surveys by Gallup over the past two decades consistently show that up to 90 percent of retirees rely on their monthly benefits to make ends meet.

But this summer, a new federal policy is set to dramatically impact a vulnerable group of retirees: those who are delinquent on their federal student loans. Up to 15 percent of Social Security checks may be garnished for retirees in default.

According to the Department of Education, 42.7 million Americans currently owe a total of $1.6 trillion in federal student loans.

And while student loan debt is often seen as a younger generation's burden, data from the Consumer Financial Protection Bureau (CFPB) tells a different story, as the number of borrowers aged 62 and older rose by 59 percent between 2017 and 2023.

Today, around 2.7 million seniors carry federal student loan debt, and an estimated 452,000 are in default and receiving Social Security.

Trump-era policy resumes garnishment for retirees with student loan default

As part of a broader push to eliminate perceived inefficiencies and fraud in government programs, the Trump istration reinstated a longstanding but previously paused policy: garnishing Social Security benefits for delinquent federal student loan payments.

Starting "sometime this summer," according to federal statements, garnishment of up to 15 percent will resume. This applies to retirees, survivors, and individuals with disabilities receiving Social Security.

The only protection built into the policy is a minimum payout floor-no garnishment can reduce a benefit check below $750 a month. For example, a retiree receiving $825 would face a $75 deduction.

This relatively sudden reduction in benefits could hit hard, but there's hope due to two underused ways to avoid garnishment.

For the roughly 452,000 retirees in default, all is not lost. The CFPB has highlighted two legal, low-barrier methods that could help many avoid this new garnishment.

1. Total and Permanent Disability (TPD) Discharge

Borrowers who became permanently disabled before reaching full retirement age (currently 67 for those born in or after 1960) may qualify to have their federal student loans canceled through the TPD program.

Thanks to a 2021 agreement between the SSA and DOE, many qualifying borrowers can be automatically identified for loan discharge. However, this process fails seniors who become disabled after reaching full retirement age.

2. Financial Hardship Exemption

Another overlooked option is applying for a financial hardship exemption. Delinquent borrowers can submit documentation to the DOE proving their income and expenses. If the DOE determines that a 15 percent garnishment would impose undue financial hardship, they may suspend the collection.

A 2015 Government ability Office report found that fewer than 10 percent of Social Security recipients with garnished benefits had applied for such an exemption. Yet the CFPB estimates that 82 percent of affected retirees would qualify for the hardship exemption.