How Student Loan Debt Works With Social Security

Noting that almost 45 million Americans are shouldering a $1.7 trillion (and growing) burden, the massive issue of ongoing student loan debt is affecting more people than ever and is especially difficult for those with long-term disabilities.

While this latest generation of borrowers typically skews younger, there are a group of Americans over 50 that may be carrying as much as $260 billion in student debt. The following is some helpful information about how those with significant disabilities may be able to discharge certain student debts.

What Happens in Student Loan Default?

If you are unable to pay your student loans, and an income-driven plan isn’t working either, your loans may go into default, and the government has a range of tools available to try and collect those outstanding balances.

Social Security payments can be garnished if you do end up defaulting on student loans, in what’s called an “offset”. There are limits to what can be garnished, and it’s important to know what they are.

Lending Tree notes that the Debt Collection Improvement Act of 1996 sets a limit of 15% of your Social Security benefits being garnished to put towards student loan repayment. However, you are always allowed to keep a minimum of $750 per month. Also, SSI benefits cannot be garnished.

What Do Garnished Wages Go Towards?

According to the same story, most of the money taken from Social Security payments doesn’t even go towards the principal. $1.1 billion was garnished from benefits in 2016, and more than 70% had gone to paying off fees and interest rather than the debt itself.

It’s worth noting that those on permanent disability may be eligible for a full discharge of certain loans as well as those with a qualifying long-term medical condition. This situation is called a “Total and Permanent Disability” discharge (TPD), and certain individuals can qualify with the appropriate paperwork:

  • Veterans filing VA documentation showing unemployability due to a service-connected disability.
  • Filing an SSA notice showing the receipt of Disability Insurance Benefits or Supplemental Security Income.
  • Submitting a physician certification proving a total and permanent disability (meaning the physical or mental impairment meets the following criteria: It has lasted continuously for at least five years, or is expected to last for the next five years, or could result in death).

The form is available to download here. It is important to note that this is for public, government-backed loans only. Private student loan policies are at the behest of the issuing institution and typically have much less bandwidth for forgiveness. However, it’s worth reaching out to your bank as the pandemic has softened many strict repayment policies in the near term.


As student loans continue to be a pressing issue in many older American’s minds, it’s important to understand what your rights are when it comes to Social Security benefits. Call the qualified Social Security claims team at Drew L. Johnson, P.C. today at (541) 434-6466 to arrange a free initial consultation if you’re facing loan default, benefit garnishment, or other financial hardship.