As May 2025 nears, millions of Social Security beneficiaries should be aware of two major changes that could significantly reduce their monthly payments. Being informed and taking action now can help protect your income and ensure your benefits remain intact.
Student Loan Garnishment Returns on May 5, 2025
After a long pause due to the COVID-19 pandemic, the U.S. Department of Education will resume collections on defaulted federal student loans starting May 5, 2025. This marks the end of a five-year relief period and reactivates the Treasury Offset Program, which allows the federal government to collect unpaid debts by garnishing certain federal payments—including Social Security benefits.
How This Affects Social Security Recipients
If you’re in default on a federal student loan, up to 15% of your monthly Social Security check can be withheld to repay the debt. For example, someone receiving $1,500 per month could see a reduction of $225, totaling a loss of $2,700 annually.
How to Avoid Garnishment
There are several steps you can take to prevent or stop garnishment:
- Set up a repayment plan: Contact your loan servicer to discuss options such as income-driven repayment or loan rehabilitation.
- Request a hardship exemption: If you’re experiencing financial difficulties, you may qualify to pause garnishment by proving economic hardship.
- Use the Fresh Start initiative: This temporary program allows eligible borrowers to exit default status, stopping collections and restoring access to federal aid programs.
The Risk of Claiming Social Security Too Early
Another common but costly mistake is claiming Social Security retirement benefits before reaching your Full Retirement Age (FRA)—typically between ages 66 and 67, depending on your birth year.
Permanent Benefit Reductions
Although you can begin receiving benefits at age 62, doing so comes with a permanent reduction of up to 30%. For instance, if your full retirement benefit is $2,000 at age 67, claiming at 62 would lower your monthly check to around $1,400. This reduction lasts for the rest of your life.
Before You Claim Early, Consider This:
- Assess your financial needs: If you’re still working or have other sources of income, it may be wise to delay claiming.
- Think long term: Delaying benefits until FRA or beyond can increase your lifetime benefit totals, especially if you live into your 80s or 90s.
- Seek financial guidance: A certified financial advisor can help you calculate the best time to claim based on your health, income, and retirement goals.
Final Thoughts
Whether you’re managing federal student loan debt or deciding when to start receiving Social Security, the decisions you make now can have lasting consequences. By understanding the risks of garnishment and the financial impact of early retirement claims, you can take steps to protect your monthly income and secure your financial future.
This is so stressful. Worrying about losing what we’ve paid in for 50 years. My social security statement clearly shows I began working a part time job after school at 14 years old with permission from my Mother. I’m 64 & due to a company buying the company I had worked at for over 10 years & a restructure my position was eliminated. At 63 years old I could not go anywhere making what I was making & I pay my bills alone. I opted to begin drawing my social security at 64 & now I am in constant worry over it being taken away by people who do not understand what financial struggle even means. This is absolutely wrong. Our country is in the hands of tyrants and we are at their mercy. I hope the people who voted for this horrible vindictive man bent on payback at the expense of the working class realizes how wrong they were about him. All we can do is pray…