Sanders Proposes Legislation to Protect Social Security Benefits from Student Loan Seizures

Millions of Americans burdened with student debt might find new protection for their Social Security benefits with legislation proposed by Senator Bernie Sanders. The proposed law aims to prevent the federal government from seizing these payments to collect on defaulted federal student loans. Sanders, an independent from Vermont and the Senate Health, Education, Labor and Pensions Committee’s ranking member, introduced the Stop Social Security Garnishment Act of 2026. Democratic Senators Elizabeth Warren and Ed Markey, both from Massachusetts, support the bill.

The proposed legislation seeks to amend federal higher education law. It would protect payments made under the Social Security Act from being reduced if a borrower defaults on a federal student loan. According to Sanders’ office, this protection would cover older Americans and those receiving Social Security Disability Insurance benefits.

Sanders remarked, “In the richest country in the history of the world, no senior should have their Social Security payments taken away from them to pay back student debt.”

The introduction of the bill coincides with a record number of Americans in default on their federal student loans. As of March, about 9.5 million borrowers, over one in five, were in default. This represented approximately $233.3 billion out of the nation’s total $1.7 trillion federally backed student loan debt.

Older Americans hold a significant share of this outstanding debt. Data from the second quarter, cited by CNBC, reveals that around 9.6 million borrowers aged 50 and above owe nearly $457 billion in student loans. A 2025 Consumer Financial Protection Bureau analysis showed about 452,000 borrowers aged 62 and over defaulted on student loans and likely receive Social Security benefits.

Federal student loans generally default after 270 days of missed payments. If unresolved, the government has robust collection powers. Through Administrative Wage Garnishment, the Education Department can mandate an employer to withhold up to 15% of a borrower’s disposable pay without court action. The Treasury Offset Program can intercept federal payments, including tax refunds and some Social Security benefits, to recover debts.

Current laws allow up to 15% of some Social Security benefits to be withheld, with only $750 per month protected by the statutory threshold, a figure unchanged since the 1990s. Before the pandemic-era suspension of student loan collections, Social Security offsets had sharply increased. From about 6,200 in 2001 to 192,300 in 2019, many beneficiaries saw deductions in Social Security payments due to student loans. In 2019, the average amount withheld was $2,232 annually, or $186 monthly.

The Consumer Finance Protection found that around 37% of 1.3 million Social Security beneficiaries with student loans depended on those benefits for at least 90% of their income. Half of those beneficiaries dealing with defaulted student loans reported skipping medical visits or going without prescription medication due to costs.

The surge in student loan defaults followed the end of pandemic-era protections. Federal student loan payments restarted in 2023, with a year-long “on-ramp” period shielding borrowers from some consequences of missed payments. This period concluded in fall 2024, and defaults began rising again in June 2025, escalating from 5.3 million in June 2025 to about 9.5 million by March 2026. Additionally, millions of borrowers faced changes in federal repayment programs, including the termination of the Biden administration’s SAVE income-driven repayment plan.

The federal government is not currently executing the involuntary collections that Sanders’ bill addresses. The Education Department announced a temporary halt to both Administrative Wage Garnishment and the Treasury Offset Program in January. This pause allows defaulted borrowers more time to explore new repayment options, consolidate loans, or pursue rehabilitation.

Sanders’ legislation proposes to permanently safeguard Social Security payments when the collected debt is a federal student loan.

The proposal, announced on August 17, is at the preliminary stage without a Senate bill number. It requires congressional approval and must pass both the Senate and House to reach the president’s desk.