If you collect $1,400 a month in Social Security and have defaulted on a federal student loan, you could lose $210 of that check once the government lifts its current pause on collections.
An estimated 452,000 borrowers ages 62 and older have defaulted on student loans and are likely receiving Social Security benefits, the Consumer Financial Protection Bureau reported.
On August 17, 2026, Senator Bernie Sanders (I-Vt.) announced he would introduce the Stop Social Security Garnishment Act of 2026 to prohibit such withholding, with formal introduction planned for September when the Senate reconvenes.
Similar proposals have been introduced since 2015, and none have passed. What retirees do before collections resume may matter more than any bill moving through Congress.
The default surge behind Sanders’ proposal
Sen. Sanders announced the legislation alongside cosponsors Sens. Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.), and the bill will be formally introduced when the Senate reconvenes in September.
Sen. Bernie Sanders (I-Vt.) argued retirees already facing rising costs should not lose benefits to old education debt.
In the richest country in the history of the world, no senior should have their Social Security payments taken away from them to pay back student debt…This is especially true when seniors throughout the country already cannot afford the skyrocketing price of healthcare, prescription drugs, groceries and housing
About 9.5 million borrowers were in default as of March 2026, nearly double the 5.3 million reported nine months earlier, according to Office of Federal Student Aid data analyzed by the Associated Press, and together, they owed approximately $233 billion.
A federal court vacated the Saving on a Valuable Education (SAVE) plan on March 10, 2026, and starting July 1, 2026, servicers began sending 7.5 million enrolled borrowers 90-day notices to choose a new plan.
How much the government can take from your check
The Debt Collection Improvement Act of 1996 authorized the Treasury Offset Program to reduce your monthly Social Security payment by up to 15%, according to the Social Security Administration.
The government uses this tool to recover defaulted federal student loan debt, and no court order is required.
The law protects the first $750 of your monthly benefit from offset, a threshold that has not been updated since 1996 and now sits $400 below the federal poverty line, according to the CFPB.
Most of your garnished money goes to fees, not your debt
The CFPB’s January 2025 report contained a finding absent from most coverage of the Sanders bill: nearly three-quarters of the money the Department of Education collects through Social Security offsets goes to interest and fees, not to paying down loan principal.
The Treasury charged the Education Department between $13.12 and $15 per Social Security offset in the 2016-2019 period the CFPB examined, and the Education Department often passes those fees on to borrowers.
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A Government Accountability Office audit reinforced the pattern, and about half of older borrowers remained in default more than five years after offsets began.
Nearly a third of those 50 and older with offsets lasting five years or longer saw their balances grow during that period. Most owed less than $10,000, yet 43% had their loans for 20 or more years.
What happens when the pause ends
The Trump administration paused Social Security offsets in June 2025, then broadened the pause in January 2026 to cover wage garnishment and tax refund seizures, according to the US Education Department.
The Education Department tied the delay to rolling out the new Repayment Assistance Plan.
The RAP plan launched on July 1, 2026, which means the stated justification for the pause is gone. No new date has been set, and when CNBC asked for a timeline, the spokesperson referred back to the January announcement.
What borrowers can do before collections restart
If your federal student loans are in default, taking action before collections resume can give you more options and potentially prevent additional financial consequences.
The right choice depends on factors such as your income, ability to make monthly payments, credit situation, and eligibility for specific federal programs.
Here are the main options, as outlined by Federal Student Aid and resources from the National Association of Student Financial Aid Administrators.
Paths out of default identified by federal agencies and NASFAA
- Loan rehabilitation requires nine on-time payments within 10 months and removes your default status entirely. Your payments can be as low as $5 per month, the National Association of Student Financial Aid Administrators (NASFAA) reported, though that minimum rises to $10 for rehabilitations completed on or after July 1, 2027, under the One Big Beautiful Bill Act.
- Direct Consolidation Loans resolve your default faster but leave it on your credit record, the National Consumer Law Center noted.
- The Repayment Assistance Plan sets your payments between 1% and 10% of income.
- Total and Permanent Disability discharge is available if a qualifying condition prevents you from working.
- Financial hardship objections let you request a reduced or eliminated offset under the Debt Collection Improvement Act.
“Default is always more expensive, whether it be monthly or whether it be in the long term,” Betsy Mayotte, president of the Institute of Student Loan Advisors, told PublicSource.
Why you can’t count on this bill to protect you
Sanders’ bill has only Democratic and Independent sponsors.
The Republican-controlled Senate passed the One Big Beautiful Bill Act in July 2025, restructuring student loan repayment options but leaving intact the Treasury Offset Program authority this proposal would restrict.
Comparable bills introduced in 2015, 2023, and 2025 by members including Sens. Ron Wyden and Cory Booker never advanced to a floor vote.
The government can seize up to 15% of your Social Security for defaulted student loans, and your current protection could be lifted at any time.
Sanders’ bill highlights the threat, but CFPB data shows most of your garnished money would go to interest and fees rather than reducing your debt.
Related: The latest Social Security warning is here; future retirees should pay attention
