My father-in-law called me on a Tuesday, which never happens. Gary doesn't call, he texts "call when you can" and waits. This time he just called, and his voice had that flat, careful tone people use when they're trying not to sound as rattled as they feel.

He'd gotten a letter from the Treasury Department about a student loan from 1991. Not his loan, technically, he co-signed for a cousin who skipped town decades ago, and Gary just let it sit. It went to collections sometime in the early 90s and he'd assumed, reasonably it turns out, that it would eventually disappear into the void. It did not disappear. It grew. And now that he's 68 and living on $1,940 a month from Social Security, the government wants to start taking 15% of it.

This isn't just Gary's problem

I spent an hour on the phone with him, then another two hours reading, and what I found was bigger than one bad cousin and one forgotten loan. Roughly 9 million Americans are currently in default on federal student loans. A 2025 analysis from the Consumer Financial Protection Bureau put the number of defaulted borrowers 62 and older at around 452,000, and a lot of them, like Gary, are living mostly on Social Security.

For a while this wasn't really being enforced. The Department of Education paused Social Security offsets back in mid-2025. But collections authority has since moved to the Treasury Department, and from what I can tell, Treasury is picking the program back up. Gary's letter was the first sign of that for our family. I doubt it's the last for a lot of other families.

How the garnishment actually works

If you're behind on a federal student loan and it's gone to default, here's roughly what can happen once Treasury starts offsetting:

• Up to 15% of your Social Security benefit can be withheld
• There's a floor, the government is supposed to leave you with at least $750 a month after the offset
• You're entitled to a notice before it starts, with a window to respond or request a review
• Tax refunds can also be seized separately through the same offset program

Gary's monthly check is $1,940, so a 15% cut comes out to about $291 a month. That's not catastrophic on paper, but he also has a car payment and his wife's blood pressure medication isn't cheap, so $291 is the difference between fine and tight every single month.

There's a bill, but it isn't law

Senators Sanders, Warren, and Markey introduced something called the Stop Social Security Garnishment Act this year, which would ban this kind of offset entirely. I think it's a reasonable idea. I also wouldn't plan anyone's finances around a bill passing, especially one that hasn't made it out of committee yet. If you or someone you love is in this situation, the honest move is to assume the garnishment is coming and figure out how to avoid or shrink it now, not wait around on Congress.

What Gary's actually doing about it

A few things, after we called his loan servicer and talked to a nonprofit credit counselor his union recommended:

• He's applying for loan rehabilitation, which requires nine on-time payments over ten months but can pull a loan out of default entirely
• He asked about an income-driven repayment plan once it's rehabilitated, since $1,940 a month qualifies him for a very low payment, possibly $0
• He requested the hardship review mentioned in his notice, since $750 a month left over genuinely isn't enough to cover rent where he lives in New Jersey
• He's keeping every letter and writing down every phone call, date, time, who he spoke to, because apparently these things get lost or misfiled constantly

None of this undoes the fact that a loan he co-signed in 1991 for someone who vanished thirty years ago is now eating into his retirement income. That part still makes me angry on his behalf. But rehabilitation plus an income-driven plan should get that $291 monthly hit down to something close to zero, it's just going to take the better part of a year to get there.

If this might be you

Check your loan status at the federal student aid site before a letter shows up, not after. If you're already in default, call your servicer and ask specifically about rehabilitation and consolidation, they're different programs with different timelines, and the person on the phone won't always volunteer which one fits your situation better. And if Social Security is most of what you live on, ask about the hardship exemption by name. Gary didn't know to ask for it. I had to find it buried in paragraph four of a letter he'd almost thrown in the recycling.