Social Security Checks To Shrink For 450,000 Older Americans In June 2025 Due To Student Loan Defaults
In June 2025, approximately 450,000 Americans aged 62 and older may experience reduced Social Security payments due to defaulted federal student loans.
This development follows the resumption of student loan collections by the Trump administration on May 5, 2025, ending pandemic-era protections .
Treasury Offset Program: Mechanism of Benefit Reduction
The Treasury Offset Program (TOP) allows the federal government to withhold up to 15% of a person’s Social Security payments to recover defaulted loans.
For beneficiaries receiving the average monthly benefit of $1,976, this could result in a reduction of nearly $300 per month .
Options to Avoid Garnishment
Beneficiaries concerned about garnishment have several options:
- Contact Loan Servicer: Engage with your loan servicer to explore options like deferment, forbearance, or establishing a flexible repayment plan.
- Income-Driven Repayment Plans: These plans adjust monthly payments based on income, potentially reducing the payment burden.
- Loan Rehabilitation or Consolidation: These processes can bring loans out of default, stopping garnishments and restoring eligibility for benefits .
Consequences of Defaulting on Student Loans
Defaulting on student loans has broader implications beyond garnishment:
- Loss of Benefits: Borrowers lose access to deferment and forbearance options.
- Ineligibility for Additional Aid: Defaults make borrowers ineligible for further federal aid, including Pell Grants and new loans.
- Credit Score Impact: Defaults are reported to credit bureaus, potentially damaging credit scores and affecting the ability to secure future financing .
Upcoming Changes in Student Loan Repayment Plans
The Trump administration is considering streamlining federal student loan repayment by reducing income-driven repayment options to just two plans.
These proposals are part of the GOP’s One Big Beautiful Bill Act, recently passed by the House of Representatives .
Social Security Payment Schedule for June 2025
The Social Security Administration (SSA) issues monthly payments based on beneficiaries’ birth dates and the date they began receiving benefits:
| Payment Date | Beneficiary Criteria |
|---|---|
| June 3, 2025 | Beneficiaries who began receiving benefits before May 1997 |
| June 11, 2025 | Birthdays between the 1st and 10th of any month |
| June 18, 2025 | Birthdays between the 11th and 20th of any month |
| June 25, 2025 | Birthdays between the 21st and 31st of any month |
Note: Those who filed claims after May 1, 1997, are placed into one of the three Wednesday payment groups based on their birth date.
Supplemental Security Income (SSI) Payments
SSI payments are typically issued on the 1st of each month. However, since June 1, 2025, falls on a Sunday, SSI payments were disbursed early on May 30, 2025 .
In June 2025, approximately 450,000 older Americans may see reduced Social Security checks due to defaulted student loans.
Understanding the Treasury Offset Program and exploring repayment options can help mitigate these reductions. Staying informed about payment schedules is crucial for financial planning.
FAQs
How can I prevent my Social Security benefits from being garnished due to student loan defaults?
Contact your loan servicer to discuss options like deferment, forbearance, or income-driven repayment plans. These can help bring your loan out of default and prevent garnishment.
What is the Treasury Offset Program?
The Treasury Offset Program allows the federal government to withhold a portion of federal payments, including Social Security benefits, to repay delinquent debts such as defaulted student loans.
Will there be an SSI payment in June 2025?
No. Since June 1, 2025, falls on a Sunday, the SSI payment for June was issued early on May 30, 2025.
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