For most retirees, Social Security isn't just a monthly check. It represents nothing short of a financial foundation that they'd struggle to make do without.
An analysis from the Center on Budget and Policy Priorities finds that 22 million Americans were pulled above the federal poverty line in 2023 by this program, including 16.3 million adults aged 65 and over. If Social Security didn't exist, the poverty rate for seniors would climb almost fourfold from a reported 10.1% in 2023 to an estimated 37.3%.
But for potentially millions of Social Security beneficiaries, their monthly payout is far from guaranteed.
Due to changes made by President Donald Trump and his administration since his inauguration on Jan. 20, one Social Security garnishment has been increased fivefold, while another has the potential to be reinstated in the new year.
President Trump delivering the State of the Union address. Image source: Official White House Photo.
The president and his administration have enacted several Social Security changes
When a new president enters office, it's commonplace for there to be changes -- and the Social Security Administration (SSA) hasn't been spared.
In March, President Trump signed an executive order that established Sept. 30 as the compliance deadline to end the issuance of paper checks from the federal government. Although more than 99% of all Social Security beneficiaries were receiving their benefits electronically by mid-year, it still meant that over 500,000 recipients would be required to set up direct deposit or a Direct Express card to continue receiving their monthly payouts.
Donald Trump's tariff and trade policy has also left a permanent impression on America's leading retirement program. Trump's tariffs on unfinished goods used to complete the manufacture of products domestically are driving up costs for select businesses and leading to a modestly higher inflation rate. Since Social Security benefits can't decline in the event of deflation (falling prices), the "Trump bump" incorporated into Social Security's 2026 cost-of-living adjustment is now permanent.
But perhaps the most prominent Social Security change came courtesy of the SSA announcing an end to the overpayment recovery rates established by former President Joe Biden.
According to KFF and Cox Media, close to 2 million Social Security beneficiaries had been overpaid, to the cumulative tune of $23 billion, as of the end of the federal government's fiscal 2023 (Sept. 30, 2023). During the COVID-19 pandemic, Biden reduced the clawback rate for these overpayments from 100% to just 10%.
In March, the SSA announced it would reinstate the 100% overpayment recovery rate, but capitulated to a 50% clawback rate in April after facing public backlash. Nevertheless, garnishing 50% of a recipient's monthly payout represents a fivefold increase from where things stood under former President Biden.
In 2026, it's possible that a new garnishment takes shape for a select group of retirees.
Image source: Getty Images.
A new Social Security garnishment may be coming -- but there are perfectly legal ways to avoid it
In addition to adjusting the clawback rate tied to overpayments, there remains the possibility of President Trump's administration garnishing the Social Security benefits of those who are delinquent on their federal student loans. This garnishment rate is up to 15% of their monthly benefit, provided they're left with at least $750.
Typically, we think of student loan borrowers as individuals in their 20s, 30s, and perhaps 40s who've taken out loans for college or an accredited trade school. But over time, we've witnessed the number of student loan borrowers entering retirement soar.
In April, when the U.S. Department of Education (DOE) announced its intent to resume federal student loan collection beginning May 5, there were 42.7 million borrowers who collectively owed north of $1.6 trillion. While the aggregate number of student loan borrowers declined by 1% between 2017 and 2023, the number of borrowers aged 62 and above catapulted by 59% to 2.7 million, based on data from the Consumer Financial Protection Bureau (CFPB).
According to the CFPB, an estimated 452,000 traditional Social Security beneficiaries (this includes retired workers, workers with disabilities, and survivor beneficiaries) were delinquent on their federal student loans and likely to experience forced collections.
In June, the DOE announced it would temporarily pause Social Security garnishments on delinquent federal student loan borrowers. However, the DOE's debt resolution page also contained a message that stated it would be "delaying offsets of these monthly benefits for a couple of months and plans to resume sometime this summer."
Obviously, the summer has passed, and the president's administration didn't move forward with this garnishment. But the language used by the DOE points to this being a temporary, rather than a permanent, action. This leaves the door open for the 15% garnishment rate for traditional recipients to be reinstated in 2026.
The silver lining for these estimated 452,000 delinquent borrowers is that there are two perfectly legal ways most individuals can avoid having their benefits garnished.
To begin with, some beneficiaries may quality for the Total and Permanent Disability (TPD) discharge program. According to U.S. Census survey data, roughly 22% of traditional Social Security recipients with federal student loans report having a permanent disability. Filing a TPD application -- this is done automatically by the SSA for beneficiaries who become disabled before reaching their full retirement age -- and being approved can result in your federal student loans being cancelled.
The other legal option, which an estimated 82% of traditional beneficiaries currently in default would qualify for, is applying for a financial hardship with the DOE.
If a delinquent federal student loan borrower can provide documentation that clearly demonstrates their expenses would be higher than their income (after the 15% garnishment), the DOE is likely to grant a hardship exemption. A 2015 report from the Government Accountability Office found that fewer than 10% of beneficiaries facing forced collections tied to delinquent student loans had applied for a financial hardship.
If this garnishment is reinstated in 2026, most aged beneficiaries would have options available.
