Lawmakers: Nix Social Security Offsets For Student Loan Debt

Older woman looking at computer screen with head in hand — (Image credit: Getty Images)

A group of more than 30 U.S. lawmakers are calling for the Biden administration to end the practice of offsetting Social Security benefits to pay off the student loan defaults of seniors and people with disabilities.

The group — led by U.S. Senators Elizabeth Warren (D-MA) and Ron Wyden (D-Ore.) and U.S. Representatives Ayanna Pressley (D-MA), Pramila Jayapal (D-WA), Raúl Grijalva (D-AZ) and John Larson (D-CT) — said that social security beneficiaries can be pushed closer to, or even into, poverty by the practice, which undermines the mission of the Social Security Act.

In a March 19 letter to the Social Security Administration (SSA), the Department of Treasury (Treasury) and Department of Education, the lawmakers urged action on the Treasury Offset (TOP) program, which authorizes the collection of defaulted student loans and other debts using Social Security benefits. They are asking that Social Security retirement, survivor and disability benefits be exempted from the offsets due to student loan debt.

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The lawmakers, who asked for a response to their letter by April 4, said that more than 3.5 million seniors had student loan debt totaling over $125 billion in 2023. Social Security benefits are reduced by about $2,500 annually for borrowers in default, they said in the letter.

The situation "can be a devastating blow to those who rely on Social Security as their primary source of income," the lawmakers said.

“Unfortunately, older borrowers often face the greatest repayment struggles, with nearly 40 percent of federal borrowers over the age of 65 in default on their student loans,” the lawmakers said. “These borrowers who have struggled with their student loan repayment progress could see their wages, tax refunds and Social Security checks garnished or offset.”

Debt relief bill introduced

The move follows the reintroduction last year of the Student Loan Relief for Medicare and Social Security Recipients Act, which would forgive student loan debt dating back more than 20 years for current and future Medicare and Social Security Disability Insurance enrollees.

The bill is "an important first step in our work to ensure that seniors and those with disabilities can focus on their health, well-being, and living a life of dignity, according to Rep. Adam Schiff (D-CA) who sponsored the legislation with Rep. Raúl Grijalva (D-AZ).

The Biden administration has canceled almost $138 billion for nearly 3.9 million borrowers to-date, including $1.2 billion in loan forgiveness for about 153,000 Americans last month and $4.8 billion in loan forgiveness for roughly 80,000 Americans in December 2023.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.