Many senior citizens in the United States are now facing lower monthly Social Security payments. This is because the government has started collecting old student loan debts again. These collections were paused for five years, especially during the COVID-19 pandemic, but now they have restarted. Let’s look at what’s happening and how it affects people.
What Is Happening With Social Security Payments?
This June, about 195,000 Americans will see a cut in their Social Security payments. The reason is the restart of federal student loan foreclosures. These are not home foreclosures but actions taken against people who have not paid back their government student loans.
The U.S. Departments of Education and Treasury sent warning letters in May 2025 to these borrowers. They were told that a part of their monthly Social Security income will be taken to pay back the loans they defaulted on.
Why Is This Happening Now?
This move ends a five-year break from these types of loan collections. The Trump administration brought back the rule that allows the government to collect student loan debts from seniors receiving Social Security.
This is the first time since the start of the pandemic that Social Security money is being taken for student loan debt. During the pandemic, the government had paused these collections to protect financially weak citizens.
How Many People Are Affected?
According to the Consumer Financial Protection Bureau (CFPB), over 450,000 senior citizens aged 62 or older are in default on their student loans. This number has grown by over 3,000% since 2001. For many of these people, Social Security is their only source of money.
Losing even a small part of their monthly payment makes it hard for them to pay for food, rent, and medicines. Many are already struggling, and this makes their financial situation worse.
How Does the Government Take the Money?
This collection is done through something called the Treasury Offset Program. It allows the government to take up to 15% of a person’s monthly Social Security payment if they haven’t been paying their student loans.
People who do not make any payments for 270 days are marked as “in default.” Their loans are then sent to collection agencies. These agencies can take money from tax refunds, wages, and even retirement benefits.
Where Does the Taken Money Go?
Most of the money taken goes toward interest and collection fees. Only a small amount goes to reduce the actual loan. This means many people still owe most of their loan, even after payments are taken out.
Because of this, the debt doesn’t go down quickly. It also becomes harder for them to get other loans or financial help in the future. Many people even lose the chance to get more federal student aid.
What Are the Bigger Effects?
People affected by these cuts have to make tough choices. They may have to choose between paying for medicine or buying food. Their quality of life drops, and their credit scores can be damaged, making it hard to get loans for housing or anything else.
This issue doesn’t just affect them now—it affects their financial future too.