Senators Collins and Nelson Introduce Debt Collection Improvement Act

Senator Susan Collins (R-ME) and Bill Nelson (D-FL) have introduced the Debt Collection Improvement Act (S. 2896) to limit the amount the federal government can garnish from monthly federal benefits. In 1998, Congress set this amount at $750 per month; since then, it has not been raised or adjusted for inflation. As a result, the federal government can garnish Social Security benefits so long as the beneficiary is not left with less than $750 per month. A recent report by the Government Accountability Organization (GAO) found that 155,000 people had their Social Security benefits garnished in 2013 because they had defaulted on their student loan payments. The vast majority – 71 percent – were receiving Social Security disability benefits. According to the GAO, if the garnishment limit had been indexed to match the rate of increase in the poverty threshold, in 2013, 68 percent of all borrowers whose Social Security benefits were garnished for federal student loan debt would have kept their entire benefit. Earlier this month, the Senate Special Committee on Aging (Chair: Sen. Nelson; Ranking Member: Sen. Collins) held a hearing on older Americans and the impact of student loan debt on retirement security. The Debt Collection Improvement Act would adjust the current $750 garnishment floor for inflation and index it going forward. The bill was referred to the Senate Committee on Finance.

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