Trump Paused Social Security Garnishment for Defaulted Student Loans: 4 Ways Your Finances Could Benefit
Written by
Chris Adam
Edited by
Jenna Klaverweiden
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The Trump administration handed a bit of relief to some Social Security recipients. Officials announced they’re pausing the garnishment of benefits for student loan borrowers who’ve defaulted.
“This gives some much-needed relief to individuals who’re often living on Social Security alone or limited income,” said Annie Cole, Ed.D., money coach and founder of Money Essentials for Women.
Some financial experts shared with GOBankingRates four ways your finances could benefit during the pause.
Also see whether baby boomers should be worried about the state of Social Security.
Pay Off Some Debt
The pause could be used to pay off some debt.
“If you know your Social Security isn’t going to be offset, you may want to save that money each month or use it to pay off higher-interest debt,” said Ashley F. Morgan, bankruptcy and debt attorney at Ashley F. Morgan Law. “Most consumer debt, credit cards or personal loans will be at higher interest rates than your student loans. If you have credit card debt with higher payments, you may want to pay off that debt as quickly as possible to ensure that you are able to afford one of the resolutions options.”
Build Up a Cash Reserve
Building up a cash reserve is another good option that could benefit your finances.
“A delay in wage garnishment may help someone build up their cash reserve,” said Kevin Estes, CFP, founder of Scaled Finance. “I generally recommend keeping at least three to six months of living expenses handy.”
Renegotiate or Refinance
This temporary relief window can also create leverage.
“With garnishment off the table for now, you may have more flexibility to explore refinancing options or negotiate income-driven repayment plans,” said Christopher Stroup, founder and president of Silicon Beach Financial. “A proactive review of your liabilities now could unlock more sustainable terms before collections restart.”
Reduce Financial Stress
Finally, the pause on Social Security garnishment can help reduce financial stress, which can have many benefits.
“It’s not just about dollars and cents — it’s about reducing stress,” said Filip Telibasa, CFP, owner of Benzina Wealth. “When someone knows their Social Security check is safe, it changes their whole outlook. They can be optimistic and focus on making progress, rather than feeling drained and constantly playing catch-up.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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