Good news for Social Security beneficiaries: Been getting smaller paychecks? They might finally go back to normal

The Trump administration has gone back on its plan to garnish Social Security benefits for those in default on their federal student loans, which will bump paychecks back up for hundreds of thousands of Americans from June.

Trump administration performs student loan U-turn

On April 21, the U.S. Department of Education announced its Office of Federal Student Aid would be resuming collections of its defaulted federal student loan portfolio, estimated at $1.6 trillion, on May 5. Collections had initially been paused as a result of the economic effects of the covid-19 pandemic.

According to the Consumer Financial Protection Bureau, more than 450,000 student loan borrowers over the age of 62 are in default on their student loans and likely to be receiving Social Security benefits. As part of paying back their defaulted loans, some recipients had their checks reduced by up to 15% in May but will not be subject to the same cuts from June onwards, for an unspecified period of time.

“The Trump Administration is committed to protecting Social Security recipients who oftentimes rely on a fixed income,” an Education Department spokesperson Ellen Keast told CNBC.

$1.6 trillion of student debt

Official figures from the U.S Department of Education show 42.7 million borrowers owe more than $1.6 trillion in student debt. Of that number, 5 million borrowers have not made a monthly payment in over 360 days and sit in default, while 4 million borrowers are in late-stage delinquency.

Only 38 percent of borrowers are in repayment and current on their student loans, with almost 1.9 million borrowers unable to begin repayment because of a processing pause put in place by the Biden administration.

Get your game on! Whether you’re into NFL touchdowns, NBA buzzer-beaters, world-class soccer goals, or MLB home runs, our app has it all.

Dive into live coverage, expert insights, breaking news, exclusive videos, and more – plus, stay updated on the latest in current affairs and entertainment. Download now for all-access coverage, right at your fingertips – anytime, anywhere.