I’m Still Plenty Irritated My Social Security is Garnished for Student Loans


Dear Steve,

$35,000 has been collected on my $20,000 student loan debt, and none of it has been applied to the principal only to interest. You told me that “if the mandatory amount garnished is insufficient to cover the interest owed each month, then no payment would be applied to the underlying principal amount.”

This philosophy seems corrupt because the loan principal can never be repaid, and garnishment can go on forever. Is there a way to challenge this legally?



Dear Crystal,

I see I did answer your first question on this subject over here.

My answer still applies to your situation. Rehabilitation would stop the garnishment.

You are not going to get an argument from me that the situation sucks. It does. But it is also in line with the terms of federal loans. For whatever reason, you were unable to repay your federal student loan from long ago and defaulted.

Social Security garnishments are the result of loan defaults.

Owing the federal government is one of those debts that can administratively garnish your Social Security check.

If you rehabilitate your loan as I described here it will stop the garnishment.

You asked if it is legal not to apply payments towards the amount due. Absolutely. Payments are applied first towards the interest accumulated on the last billing cycle, and then the balance is applied to the principal balance.

This is the same with mortgages, car loans, credit cards, and nearly every type of consumer debt. Unfortunately, this is the way the financial system works. The situation you are facing with your federal student loans is not unusual, it is standard and the way the debt repayment system operates.

The big trap in federal student loans is when people fall behind on their payments or defer paying their loans. The balances grow and by the time they start paying, sometimes the payment won’t cover the growing interest.

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Since a Social Security garnishment is limited in the amount that can be deducted, it is entirely possible the garnished amount will not even cover the interest.

If you rehabilitate your student loan to stop the garnishment, your balances will continue to grow anyway but your payment will be zero or very low to keep you out of garnishment. That seems like a partial victory.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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