If you borrow for college with federal student loans and you fail to repay them, you should know that the government may reduce your annual Social Security income by an average of $2,500. We say “may” because there are scenarios where you can have federal student loans discharged due to disability without impacting your benefit payments. Additionally, there are limits to how much the government may garnish your Social Security benefits.

While defaulting on private student loans won’t result in a loss of Social Security income, 澳洲幸运5官方开奖结果体彩网:private student loan companies can sue you and get their money back that way. This guide goes over how defaulting on student loans can impact your retirement and the steps that you can take to avoid student loan garnishment completely.

How Student Loan Default Affects Your Social Security Ben🌃efits

When you default on federal 澳洲幸运5官方开奖结果体彩网:student loans, you should know the government will find a way to get its money back, making your finances much more difficult to manage until they do. For example, you can get sued and have your wages 澳洲幸运5官方开奖结果体彩网:garnished at work—but that’s far from the extent of it.

According to the United States Department of Education, defaulting on student loans can also lead you to having your 澳洲幸运5官方开奖结果体彩网:tax refunds and federal benefits payments (like 澳洲幸运5官方开奖结果体彩网:Social Security payments) withheld and applied to your defaulted loans through a process called Treasury offset.

You'll receive a notice of the intent to offset at your last known address once it's scheduled to begin in 65 days. This garnishment will then regularly occur until either your unpaid debts are repaid or 澳洲幸运5官方开奖结果体彩网:the default status on your federal student loans has been removed.

Social Security Garnishment Limit

Fortunately, the federal gove💛rnment can only seize a certain amount of Socia📖l Security payments through Treasury offset.

This limit is set at 15% of your federal benefits payments; according to a 2023 report from the Center for Retirement Research at Boston College, this would leave current and future retirees with 4% to 6% less in retirement income than they would otherwise have.

How to Stop Social Security Garnishment for 🅷Student Loans

According to the U.S. Department of Education, borrowers can enter into a 澳洲幸运5官方开奖结果体彩网:repayment agreement to stop garnishment of Social Security benefits due to nonpayment of federal student loans, so long as the first payment is made within 65 days and regularly scheduled payments are made after that.

How to Request Social Security Garni𓃲shment Hardship

The Education Department says you have the legal right to request a review of your account to prevent a Treasury offset from occurring, which you would do if you object to your debt's enforceability or default status. If you're successful, your wages won't be garnished for 12 months, or the amount garnished may be reduced.

To get a hearing, you'll need to request in writing, postmarked no later than 30 days from the date your garnishment notice was sent. You'll also have to provide proof that supports your objections. Your loan holder will arrange the hearing, which may be in person or over the phone. All in-person hearings are held at one of three regional offices.

The Bottom Line

Not paying your 澳洲幸运5官方开奖结果体彩网:student loans won’t end well, especially if you don't plan to get back on track. You won't just suffer damage to your 澳洲幸运5官方开奖结果体彩网:credit score and your wages being withheld. You'll also have your future 澳洲幸运5官方开奖结果体彩网:Social Security benefits garnished.

The obvious answer to this predicament is staying on track with student loan payments to avoid all the mayhem that can ensue when you don’t. Fortunately, there are loan repayment plans that can help borrowers with lower incomes. In fact, income-driven repayment (IDR) plans for federal student loans can come with a monthly payment as low as $0 for those who qualify.