Student Loan Change Would Bar Social Security Garnishment for Payments - Newsweek

Senator Bernie Sanders of Vermont introduced legislation on Tuesday that would prevent the federal government from garnishing Social Security benefits from older Americans and people with disabilities who have fallen behind on their student loans.

The proposal, titled the Stop Social Security Garnishment Act, comes as millions of federal student loan borrowers remain in default and are facing potential collection actions.

Sanders said the measure is intended to ensure that retirees and disabled beneficiaries are not stripped of their Social Security income to repay decades-old education debt.

"As a result of Trump's disastrous cuts to education, an increasing number of seniors are in danger of having their Social Security checks garnished to pay back student loans they took out decades ago. That is beyond unacceptable," Sanders said in a statement.

"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 health care, prescription drugs, groceries and housing. Congress must pass this legislation."

Senators Elizabeth Warren of Massachusetts, Ed Markey of Massachusetts and Ron Wyden of Oregon have co-sponsored the legislation alongside six other Democratic lawmakers.

The bill targets a growing issue affecting older borrowers as student loan balances increasingly follow Americans into retirement.

About 9 million Americans are currently in default on their student loans and could face collection measures, which includes garnishment of wages or Social Security benefits. According to Sanders' office, more than a third of Social Security recipients with student debt rely on Social Security benefits to make ends meet.

The Stop Social Security Garnishment Act would prohibit the federal government from garnishing Social Security payments, including Social Security Disability Insurance (SSDI) benefits, to collect on student loan debt.

Retirees and disabled Americans who receive Social Security or SSDI and are struggling with federal student loan debt would benefit under the law, particularly those whose loans have entered default.

"Sanders' proposal would draw a clear line between student loan collection and security of retirement savings by preventing the federal government from taking Social Security retirement or disability benefits to collect defaulted student debt," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.

"The fact that millions of older Americans still carry student loans shows the changing landscape of student loans and their impact," he added.

Sanders announced the legislation on August 17 but introduced it officially on Tuesday.

The proposal now faces the standard legislative process, including committee consideration and votes in both chambers of Congress before it can become law.

"While the bill would provide support for this population, its passing will run into difficulties, as some in Congress are concerned any support of student loan relief will appear to be advocacy of potential forgiveness," Beene said.

In announcing the legislation, Sanders criticized the prospect of retirees losing part of their Social Security benefits to repay student debt.

"Half of Social Security recipients that had a Social Security check garnished because of a defaulted student loan reported skipping a doctor's visit or reported being unable to obtain a prescription they needed, due to cost," Sanders' office said in a news release.

"The Stop Social Security Garnishment Act of 2026 will put an end to this absurdity and ensure no Social Security payments are taken away from older adults or individuals with disabilities due to student loan debt," the release continued.

The proposed legislation is national in scope and would apply to Social Security beneficiaries across the United States.

Sanders' announcement did not say which states were most affected by garnishment of Social Security benefits tied to student loan debt. However, because the proposal would cover eligible beneficiaries nationwide, retirees and disabled recipients in every state would benefit.

"Some are borrowing later in life, parents are taking on debt for their children, and balances can follow borrowers for decades as interest and rough personal and professional financial moments prevent them from eliminating the principal," Beene said.

Borrowers in all 50 states can potentially face benefit garnishment under current law if they have defaulted on federal student loans and meet applicable collection criteria.

"When you think about it, if these loans are still in default at that stage of life, that could be an indication that the individual is already having difficulty affording the payments," Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. "Garnishing their Social Security benefits could further reduce income that may already be limited."

The bill's prospects may depend on whether Democrats can attract bipartisan support in a divided Congress.

So far, the bill has been endorsed by organizations such as the American Federation of Teachers, Student Debt Crisis Center, Protect Borrowers, Social Security Works, the Alliance for Retired Americans and the National Consumer Law Center, according to Sanders' office.

"Whether a bill is passed is up to who has the congressional power to act," Thompson said. "In our current state, this does not have a chance as Republicans own the House, Senate and the White House. So this is dead on arrival."

Contact Newsweek editors on this story: Jenni Fink and Shakeema Edwards.