Retirement, Student Loans and Social Security

When we think of retirement we think of sitting back somewhere warm and enjoying what we have worked so hard all of our life to build.  When we think of retirement we do not think of having outstanding student loans…but nowadays we may have to!

The Government Accountability Office (GAO), a research arm of Congress, reported that people are having their Social Security checks garnished to pay off delinquent student loans. The amount the government withholds varies widely, though it can run up to 15% of each month’s check.  Although it won’t take your whole check, even a small loss can have a big effect on your retirement planning.

How can this happen? Some retirees may still be carrying debt from their own undergraduate or graduate years. Others may have taken out federal loans if they returned to college in midlife. But many of these retirees went into debt later in life to help their children or grandchildren. 

According to the Federal Reserve Bank of New York, younger generations are in deeper debt, which means stories of Social Security garnishment could become more commonplace when they enter retirement. Borrowers in their 20s and 30s owe roughly $600 billion. The younger generations are also leaving college with more debt than the older generations. As student loan debt continues to grow, more and more people may become affected by this in the future.


What can you do if this happens to you:

  1. Remember that student loans are not dischargeable in bankruptcy.
  2. Only federal student loans can result in garnishment. If you are retired and living on Social Security, private student loan lenders will have no recourse to garnish your Social Security benefits.
  3. According to the GAO, nearly one-third of older borrowers were able to pay off their loans or cancel their debt by obtaining relief through a process known as total and permanent disability (TPD) discharge, which is available to borrowers with a disability that is not expected to improve. A borrower may be eligible for TPD discharge, but they must comply with annual documentation requirements.
  4. Contact the Department of Education and find out how you can get your loan out of default. You may be able to make a few payments and then apply for income based repayment. If you can get an income based repayment plan, your payments will likely drop close to zero or zero if your income is primarily your Social Security.


Be proactive. With proper planning, the risk of garnishment may be reduced or even avoided, allowing you to keep your retirement planning intact.

If you have any questions about the issues presented above or care to discuss any other planning issues, please call us at 860-769-6938, visit our website at or email us at


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