Can My Social Security Payment be Taken to Pay My Student Loans?

03 Aug Can My Social Security Payment be Taken to Pay My Student Loans?

Surprisingly, yes! Several years ago, Congress passed legislation allowing up to 25% of a social security check to be taken to re-pay student loans. This includes accrued interest on the loan(s) and will continue for as long as it takes to re-pay them.

Student loans don’t go away there is no statute of limitations on their enforcement and little relief from having to pay them, unless you become completely disabled. That includes interest on the loans as well, which can accumulate at staggering amounts. In fact, as noted by fellow BLN member, Carmen Deluttri, enforcement of these loans often becomes predatory.

The scariest part of this for many people is that the loan can be ignored for years, and then when the social security checks start coming, there is a deduction for loan repayment! If you’ve worked all your life towards retirement, social security isn’t much to begin with. Having it reduced to pay an ancient debt can be devastating.

Fortunately, there is some relief. If you can show complete disability the loans will go away. If you can show that paying them will be cause an undue hardship, they can be discharged in bankruptcy.


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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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