A New Social Security Garnishment Is Coming, Courtesy of the Trump Administration -- and There Are 2 Perfectly Legal Ways You Can Avoid It

For most aging workers, Social Security provides more than just a monthly check. The payout they receive serves as a financial foundation that helps nearly nine out of 10 retired workers make ends meet, according to a quarter-century of annual surveys from Gallup.

But for some Social Security beneficiaries, this payout they've come to rely on isn't guaranteed. Since President Donald Trump took office for his second, non-consecutive term on Jan. 20, 2025, he and his administration have enacted several changes to America's leading retirement program. Chief among them are two Social Security garnishments: one already in place and one that appears likely to be reinstated later this year.

President Trump delivering remarks. Image source: Official White House Photo by Daniel Torok.

Trump and his administration have overseen several Social Security changes

To preface the following discussion, Social Security is a dynamic program. Changes are made on a near-annual basis to keep up with inflation and other shifting variables.

For instance, Social Security beneficiaries were privy to a "Trump bump" this year, with Donald Trump's tariff and trade policy lifting the inflation rate and increasing the program's annual cost-of-living adjustment (COLA) to 2.8%. There's a good chance beneficiaries will enjoy a second consecutive Trump bump in 2027 due to inflationary pressures from the Iran war.

On a more direct level, President Trump signed an executive order in March 2025 that established Sept. 30, 2025, as the compliance date to end the issuance of paper checks by the federal government. Electronic payments are deemed safer and more cost-effective for Social Security and its recipients.

But perhaps the most eyebrow-raising Social Security change in Trump's second term was the Social Security Administration (SSA) adjusting the overpayment recovery rate that was previously changed under former President Joe Biden.

Prior to the COVID-19 pandemic, the overpayment clawback rate was set at 100%. In other words, if the SSA sent you benefits that you weren't owed, and you didn't repay these benefits in full upon notice of overpayment, your payouts could be fully garnished until the repayment is complete.

Under Biden, this overpayment clawback rate was slashed to just 10%. The SSA initially attempted to reinstate the previous 100% recovery rate in March 2025, but received public backlash. It ultimately settled on a revised 50% overpayment garnishment, which has since gone into effect.

But within mere months, another dreaded Social Security garnishment may be reinstated.

Image source: Getty Images.

Another Social Security garnishment is coming, but there are ways to avoid it

Next in line for involuntary garnishments are a select group of Social Security beneficiaries who are delinquent on their federal student loans.

While most student loan borrowers are in their 20s and 30s, there's been a staggering increase in the number of senior student-loan borrowers in recent years. Data from the Consumer Financial Protection Bureau (CFPB) shows that while the cumulative number of student loan borrowers fell by 1% from 2017 to 2023, it jumped by 59% to 2.7 million for individuals aged 62 and above.

The silver lining is that a majority of senior federal student loan borrowers aren't delinquent on their payments. But the CFPB does estimate that 452,000 traditional Social Security beneficiaries -- retired-worker beneficiaries, workers with disabilities, and survivor beneficiaries -- are behind on their federal student loan payments.

The Treasury Offset Program (TOP) can garnish up to 15% of a delinquent individual's Social Security benefit, provided they're still left with a monthly payout of at least $750.

On Jan. 16, 2026, the U.S. Department of Education (DOE) announced delays in involuntary collections on federal student loans, including TOP, to "enable the Department to implement major student loan repayment reforms under the Working Families Tax Cuts Act." These reforms aim to simplify repayment options and provide new ways for delinquent borrowers to rehabilitate their federal student loans.

The DOE press release specifically notes that these options will be available for borrowers beginning July 1, 2026. According to Under Secretary of Education Nicholas Kent:

After the Biden Administration misled borrowers into believing their student loans would not need to be repaid, the Trump Administration is committed to helping student and parent borrowers resume regular, on-time repayment, with more clear and affordable options, which will support a stronger financial future for borrowers and enhance the long-term health of the federal student loan portfolio.

In other words, it's not a matter of if but when Social Security beneficiaries who are delinquent on their federal student loans are subject to a 15% garnishment rate after July 1.

But many of these estimated 452,000 delinquent Social Security beneficiaries may be able to avoid this involuntary garnishment altogether.

For starters, if an individual has a permanent disability, they can qualify for the Total and Permanent Disability (TPD) discharge program. If you become disabled before reaching your full retirement age, the SSA automatically files a TPD application on your behalf. But if the permanent disability occurs after you hit your full retirement age, you'll need to do the legwork toward canceling your federal student loan debt.

The other perfectly legal option is for a delinquent federal student loan borrower to apply for a financial hardship with the DOE. The borrower will be required to provide documentation that their qualified expenses would be higher than their income after the 15% garnishment. According to the CFPB, a whopping 82% of Social Security beneficiaries with federal student loans in default would qualify for a financial hardship.

After July 1, the clock starts ticking.

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