If you are receiving Social Security payments and are delinquent on your U.S. Government-backed student loan, don’t be surprised when a letter arrives in the mail informing you that the Gov wants to dip into your monthly benefits award to pay off that debt.  Per the Government Accountability Office (GAO), it’s happening to tens of thousands of Americans every year.

Thinking the loan is too old to collect on?

Think again.  It does not matter how long ago you were in school.  A 2005 U.S. Supreme Court case (Lockhart v. U.S.) determined there is no statute of limitations on Social Security benefits to repay student loans.

However, the government can only grab up to 15 percent, provided your remaining monthly benefit doesn’t drop lower than $750.  So, if you derive most of your income from Social Security, you may not have to pay off your student loans; at least not through Social Security benefits deductions.

And your Social Security income won’t start disappearing without adequate warning, including the opportunity to enter a separate repayment program.

What about those Repayment Programs?

The federal student loan program offers three programs that allow borrowers to pay off their loans each month based on their incomes.  In some plans, the loans are forgiven after 20 or more years if any balance remains, or when a borrower dies.

Each of the three plans – Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment, bases payment amounts on a borrower’s adjusted gross income as reflected on his/her most recent federal income tax return.

The federal government can garnish your benefits for repayment of other types of debts.

Keep in mind, aside from federal student loans, the government can attach benefits for payment of federal income taxes, child support and alimony, non-tax debt owed to other federal agencies, defaulted federal home loans and certain civil penalties.  However, Supplemental Security Income cannot be garnished under any circumstance.

Please consult with a qualified professional for more information and recommendations as to the best way to proceed and the possibility of keeping your Social Security benefits intact.