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The House Republicans’ multi-trillion-dollar spending package includes what analysts are calling a “revenge tax,” known as Section 899.
As drafted, the provision would allow the U.S. to hike levies for countries with “unfair foreign taxes” by 5% per year, capped at 20%.
The measure would also expand the so-called base erosion and anti-abuse tax, or BEAT, which aims to prevent corporations from shifting profits abroad to avoid taxes.

WASHINGTON DC, UNITED STATES – MAY 30: United States President Donald Trump departs at the White House to U.S. Steel’s Irvin Works in West Mifflin, Pennsylvania in Washington D.C May 30, 2025.
Celal Gunes | Anadolu | Getty Images

As the Senate weighs President Donald Trump’s multi-trillion-dollar spending package, a lesser-known provision tucked into the House-approved bill has pushback from Wall Street.
The House measure, known as Section 899, would allow the U.S. to add a new tax of up to 20% on foreigners with U.S. investments, including multinational companies operating in the U.S.

Some analysts call the provision a “revenge tax” due to its wording. It would apply to foreign entities if their home country imposes “unfair foreign taxes” against U.S. companies, according to the bill.
“Wall Street investors are shocked by [Section] 899 and apparently did not see it coming,” James Lucier, Capital Alpha Partners managing director, wrote in a June 5 analysis.
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If enacted as written, the provision could have “significant implications for the asset management industry,” including cross-border income earned by hedge funds, private equity funds and other entities, Ernst & Young wrote on June 2.
Passive investment income could be subject to a higher U.S. withholding tax, as high as 50% in some cases, the company noted. Some analysts worry that could impact future investment.

The Investment Company Institute, which represents the asset management industry serving individual investors, warned in a May 30 statement that the provision is “written in a manner that could limit foreign investment to the U.S.”
But with details pending as the Senate assesses the bill, many experts are still weighing the potential impact — including who could be affected.
Here’s what investors need to know about Section 899.

How the ‘revenge tax’ could work

As drafted, Section 899 would allow the U.S. to hike existing levies for countries with “unfair foreign taxes” by 5% per year, capped at 20%.
Several kinds of tax fall under “unfair foreign taxes,” according to the provision. Those include the undertaxed profits rule, which is associated with part of the global minimum tax negotiated by the Biden administration. The term would also apply to digital services taxes and diverted profits taxes, along with new levies that could arise, according to the bill.

The second part of the measure would expand the so-called base erosion and anti-abuse tax, or BEAT, which aims to prevent corporations from shifting profits abroad to avoid taxes.
“Basically, all businesses that are operating in the U.S. from a foreign headquarters will face that,” said Daniel Bunn, president and CEO of the Tax Foundation. “It’s pretty expansive.”
The retaliatory measures would apply to most wealthy countries from which the U.S. receives direct foreign investment, which could threaten or harm the U.S. economy, according to Bunn’s analysis.
Notably, the proposed taxes don’t apply to U.S. Treasuries or portfolio interest, according to the bill.

‘Strong priority’ for House Republicans

Section 899 still needs Senate approval, and it’s unclear how the provision could change amid alarm from Wall Street.
But the measure has “strong support” from others in the business community, and it’s a “strong priority” for Republican House Ways and Means Committee members, Capital Alpha Partners’ Lucier wrote.
House Ways and Means Committee Chairman Jason Smith, R-Mo., first floated the idea in a May 2023 bill, and has been outspoken, along with other Republicans, against the global minimum tax.

If enacted as drafted, Section 899 could raise an estimated $116 billion over 10 years, according to the Joint Committee on Taxation.
That could help fund other priorities in Trump’s mega-bill, and if removed, lawmakers may need to find the revenue elsewhere, Bunn said.
However, House Ways and Means Republicans may ultimately want foreign countries to adjust their tax policies before the new tax is imposed.
“If these countries withdraw these taxes and decide to behave, we will have achieved our goal,” Smith said in a June 4 statement. More

A wheel loader operator fills a truck with ore at the MP Materials rare earth mine in Mountain Pass, California, January 30, 2020.
Steve Marcus | Reuters

The rare-earth miner MP Materials will enjoy growing strategic value to the U.S., as geopolitical tensions with China make the supply of critical minerals more uncertain, according to Morgan Stanley.
The investment bank upgraded MP Materials to the equivalent of a buy rating with a stock price target of $34 per share, implying 32% upside from Friday’s close.

MP Materials owns the only operating rare earth mine in the U.S. at Mountain Pass, California. China dominates the global market for rare earth refining and processing, according to Morgan Stanley.
“Geopolitical and trade tensions are finally pushing critical mineral supply chains to top of mind,” analysts led by Carlos De Alba told clients in a Thursday note. “MP is the most vertically integrated rare earths company ex-China.”
Beijing imposed export restrictions on seven rare earth elements in April in response to President Donald Trump’s tariffs. It has kept those restrictions in place despite trade talks with U.S.
Trump removed some restrictions Wednesday on the Defense Production Act, which could allow the federal government to offer an above market price for rare earths. MP Materials is the best positioned company to benefit from this, according to Morgan Stanley. Its shares rose more than 5% on Thursday.
MP Materials is developing fully domestic rare earth supply chain in the U.S. and plans to begin commercial production of magnets used in most electric vehicle motors, offshore wind wind turbines, and the future market for humanoid robots, according to Morgan Stanley.
The investment bank expects MP Materials to post negative free cash flow this year and in 2026, but the company has a strong balance sheet should accelerate positive free cash flow from 2027 onward. More

Losing track of an old 401(k) is an ongoing problem as workers change jobs with increased frequency.
Some former employees unknowingly pay thousands of dollars in fees when they leave a position but don’t take their retirement savings with them.

With more Americans job hopping in the wake of the Great Resignation, the risk of “forgetting” a 401(k) plan with a previous employer has jumped, recent studies show. 
As of 2023, there were 29.2 million left-behind 401(k) accounts holding roughly $1.65 trillion in assets, up 20% from two years earlier, according to the latest data by Capitalize, a fintech firm.

Nearly half of employees leave money in their old plans during work transitions, according to a 2024 report from Vanguard.
However, that can come at a cost.
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For starters, 41% of workers are unaware that they are paying 401(k) fees at all, a 2021 survey by the U.S. Government Accountability Office found.
In most cases, 401(k) fees, which can include administrative service costs and fees for investment management, are relatively low, depending on the plan provider. 

But there could be additional fees on 401(k) accounts left behind from previous jobs that come with an extra bite.

Fees on forgotten 401(k)s

Jelena Danilovic | Getty Images

Former employees who don’t take their 401(k) with them could be charged an additional fee to maintain those accounts, according to Romi Savova, CEO of PensionBee, an online retirement provider. “If you leave it with the employer, the employer could force the record keeping costs on to you,” she said.
According to PensionBee’s analysis, a $4.55 monthly nonemployee maintenance fee on top of other costs can add up to nearly $18,000 in lost retirement funds over time. Not only does the monthly fee eat into the principal, but workers also lose the compound growth that would have accumulated on the balance, the study found.
Fees on those forgotten 401(k)s can be particularly devastating for long-term savers, said Gil Baumgarten, founder and CEO of Segment Wealth Management in Houston.
That doesn’t necessarily mean it pays to move your balance, he said.
“There are two sides to every story,” he said. “Lost 401(k)s can be problematic, but rolling into a IRA could come with other costs.”

What to do with your old 401(k)

When workers switch jobs, they may be able to move the funds to a new employer-sponsored plan or roll their old 401(k) funds into an individual retirement account, which many people do.
But IRAs typically have higher investment fees than 401(k)s and those rollovers can also cost workers thousands of dollars over decades, according to another study, by The Pew Charitable Trusts, a nonprofit research organization.
Collectively, workers who roll money into IRAs could pay $45.5 billion in extra fees over a hypothetical retirement period of 25 years, Pew estimated.
Another option is to cash out an old 401(k), which is generally considered the least desirable option because of the hefty tax penalty. Even so, Vanguard found 33% of workers do that.

How to find a forgotten 401(k) 

While leaving your retirement savings in your former employer’s plan is often the simplest option, the risk of losing track of an old plan has been growing.
Now, 25% of all 401(k) plan assets are left behind or forgotten, according to the most recent data from Capitalize, up from 20% two years prior.
However, thanks to “Secure 2.0,” a slew of measures affecting retirement savers, the Department of Labor created the retirement savings lost and found database to help workers find old retirement plans.
“Ultimately, it can’t really be lost,” Baumgarten said. “Every one of these companies has a responsibility to provide statements.” Often simply updating your contact information can help reconnect you with these records, he advised.   
You can also use your Social Security number to track down funds through the National Registry of Unclaimed Retirement Benefits, a private-sector database.

In 2022, a group of large 401(k) plan administrators launched the Portability Services Network.
That consortium works with defined contributor plan rollover specialist Retirement Clearinghouse on auto portability, or the automatic transfer of small-balance 401(k)s. Depending on the plan, employees with up to $7,000 could have their savings automatically transferred into a workplace retirement account with their new employer when they change jobs.
The goal is to consolidate and maintain those retirement savings accounts, rather than cashing them out or risk losing track of them, during employment transitions, according to Mike Shamrell, vice president of thought leadership at Fidelity Investments, the nation’s largest provider of 401(k) plans and a member of the Portability Services Network.
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The Trump administration on Friday asked the Supreme Court to lift a court order to reinstate U.S. Department of Education employees the administration had terminated.
A federal appeals court had refused on Wednesday to lift the judge’s ruling.

A demonstrator speaks through a megaphone during a Defend Our Schools rally to protest U.S. President Donald Trump’s executive order to shut down the U.S. Department of Education, outside its building in Washington, D.C., U.S., March 21, 2025.
Kent Nishimura | Reuters

The Trump administration on Friday asked the Supreme Court to lift a court order to reinstate U.S. Department of Education employees the administration had terminated as part of its efforts to dismantle the agency.
Officials for the administration are arguing to the high court that U.S. District Judge Myong Joun in Boston didn’t have the authority to require the Education Department to rehire the workers. More than 1,300 employees were affected by the mass layoffs in March.

The staff reduction “effectuates the Administration’s policy of streamlining the Department and eliminating discretionary functions that, in the Administration’s view, are better left to the States,” Solicitor General D. John Sauer wrote in the filing.
A federal appeals court had refused on Wednesday to lift the judge’s ruling.
In his May 22 preliminary injunction, Joun pointed out that the staff cuts led to the closure of seven out of 12 offices tasked with the enforcement of civil rights, including protecting students from discrimination on the basis of race and disability.
Meanwhile, the entire team that supervises the Free Application for Federal Student Aid, or FAFSA, was also eliminated, the judge said. (Around 17 million families apply for college aid each year using the form, according to higher education expert Mark Kantrowitz.)
The Education Department cannot be abolished without approval by Congress.

The Trump administration announced its reduction in force on March 11 that would have gutted the agency’s staff.
Two days later, 21 states — including Michigan, Nevada and New York — filed a lawsuit against the Trump administration for its staff cuts.
After President Donald Trump signed an executive order on March 20 aimed at dismantling the Education Department, more parties sued to save the department, including the American Federation of Teachers.
Former President Jimmy Carter established the current-day U.S. Department of Education in 1979. Since then, the agency has faced other existential threats, with former President Ronald Reagan calling for its end and Trump, during his first term, attempting to merge it with the Labor Department.

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The National Oceanic and Atmospheric Administration, or NOAA, predicts a 60% chance of an “above-normal” Atlantic hurricane season, which spans from June 1 to November 30.
The agency forecasts 13 to 19 named storms, including three to five major hurricanes of Category 3 or higher.
Now is the time to check your home insurance policy and make necessary changes, experts say.

PUNTA GORDA – OCTOBER 10: In this aerial view, a person walks through flood waters that inundated a neighborhood after Hurricane Milton came ashore on October 10, 2024, in Punta Gorda, Florida. The storm made landfall as a Category 3 hurricane in the Siesta Key area of Florida, causing damage and flooding throughout Central Florida. (Photo by Joe Raedle/Getty Images)
Joe Raedle | Getty Images News | Getty Images

It’s officially hurricane season, and early forecasts indicate it’s poised to be an active one.
Now is the time to take a look at your homeowners insurance policy to ensure you have enough and the right kinds of coverage, experts say — and make any necessary changes if you don’t.

The National Oceanic and Atmospheric Administration predicts a 60% chance of “above-normal” Atlantic hurricane activity during this year’s season, which spans from June 1 to November 30.
The agency forecasts 13 to 19 named storms with winds of 39 mph or higher. Six to 10 of those could become hurricanes, including three to five major hurricanes of Category 3, 4, or 5.

You should pay close attention to your insurance policies.

Charles Nyce
risk management and insurance professor at Florida State University

Hurricanes can cost billions of dollars worth of damages. Experts at AccuWeather estimate that last year’s hurricane season cost $500 billion in total property damage and economic loss, making the season “one of the most devastating and expensive ever recorded.”
“Take proactive steps now to make a plan and gather supplies to ensure you’re ready before a storm threatens,” Ken Graham, NOAA’s national weather service director, said in the agency’s report.
Part of your checklist should include reviewing your insurance policies and what coverage you have, according to Charles Nyce, a risk management and insurance professor at Florida State University. 

“Besides being ready physically by having your radio, your batteries, your water … you should pay close attention to your insurance policies,” said Nyce.
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You want to know four key things: the value of property at risk, how much a loss could cost you, whether you’re protected in the event of flooding and if you have enough money set aside in case of emergencies, he said.
Bob Passmore, the department vice president of personal lines at the American Property Casualty Insurance Association, agreed: “It’s really important to review your policy at least annually, and this is a good time to do it.”
Insurers often suspend policy changes and pause issuing new policies when there’s a storm bearing down. So acting now helps ensure you have the right coverage before there’s an urgent need.
Here are three things to consider about your home insurance policy going into hurricane season, according to experts.

1. Review your policy limits

First, take a look at your policy’s limits, which represents the highest amount your insurance company will pay for a covered loss or damage, experts say. You want to make sure the policy limit is correct and would cover the cost of rebuilding your home, Passmore said.
Most insurance companies will calculate the policy limit by taking into account the size of your home and construction costs in your area, said Nyce. For example, if you have a 2,000 square foot home, and the cost of construction in your area is $250 per square foot, your policy limit would need to be $500,000, he said.
You may risk being underinsured, however, especially if you haven’t reviewed your coverage in a while. Rising building costs or home renovations that aren’t reflected in your insurer’s calculation can mean your coverage lags the home’s replacement value.
Repair and construction costs have increased in recent years, experts say. In the last five years, the cost of construction labor has increased 36.3% while the building material costs are up 42.7%, the APCIA found.
Most insurance companies follow what’s called the 80% rule, meaning your coverage needs to be at least 80% of its replacement cost. If you’re under, you risk your insurer paying less than the full claim.

2. Check your deductibles

Take a look at your deductibles, or the amount you have to pay out of pocket upfront if you file a claim, experts say.
For instance, if you have a $1,000 deductible on your policy and submit a claim for $8,000 of storm coverage, your insurer will pay $7,000 toward the cost of repairs, according to a report by NerdWallet. You’re responsible for the remaining $1,000.
A common way to lower your policy premium is by increasing your deductibles, Passmore said. 
Raising your deductible from $1,000 to $2,500 can save you an average 12% on your premium, per NerdWallet’s research.
But if you do that, make sure you have the cash on hand to absorb the cost after a loss, Passmore said.

Don’t stop at your standard policy deductible. Look over hazard-specific provisions such as a wind deductible, which is likely to kick in for hurricane damage.
Wind deductibles are an out-of-pocket cost that is usually a percentage of the value of your policy, said Nyce. As a result, they can be more expensive than your standard deductible, he said. 
If a homeowner opted for a 2% deductible on a $500,000 house, their out-of-pocket costs for wind damages can go up to $10,000, he said.
“I would be very cautious about picking larger deductibles for wind,” he said.

3. Assess if you need flood insurance

Floods are usually not covered by a homeowners insurance policy. If you haven’t yet, consider buying a separate flood insurance policy through the National Flood Insurance Program by the Federal Emergency Management Agency or through the private market, experts say. 
It can be worth it whether you live in a flood-prone area or not: Flooding causes 90% of disaster damage every year in the U.S., according to FEMA.
In 2024, Hurricane Helene caused massive flooding in mountainous areas like Asheville in Buncombe County, North Carolina. Less than 1% of households there were covered by the NFIP, according to a recent report by the Swiss Re Institute. 

If you decide to get flood insurance with the NFIP, don’t buy it at the last minute, Nyce said. There’s usually a 30-day waiting period before the new policy goes into effect. 
“You can’t just buy it when you think you’re going to need it like 24, 48 or 72 hours before the storm makes landfall,” Nyce said. “Buy it now before the storms start to form.” 
Make sure you understand what’s protected under the policy. The NFIP typically covers up to $250,000 in damages to a residential property and up to $100,000 on the contents, said Loretta Worters, a spokeswoman for the Insurance Information Institute.
If you expect more severe damage to your house, ask an insurance agent about excess flood insurance, Nyce said.
Such flood insurance policies are written by private insurers that cover losses over and above what’s covered by the NFIP, he said. More

A new law passed in January provides nearly 3 million people with Social Security benefit increases.
In a new update, the Social Security Administration says 91% of adjustments have been processed.
Here’s the latest on the status of those payments.

A Social Security Administration (SSA) office in Washington, DC, March 26, 2025. 
Saul Loeb | Afp | Getty Images

The Social Security Administration has now processed about 91% of cases related to a new law that is prompting higher benefits and lump-sum retroactive payments for nearly 3 million people, according to a new update from the agency.
The Social Security Fairness Act, which was signed into law in January, eliminated two provisions — the Windfall Elimination Provision, or WEP, and the Government Pension Offset, or GPO — that previously reduced benefits for individuals who also receive income from public pensions that did not require the payment of Social Security payroll taxes.

At the start of the year, the Social Security Administration said affected beneficiaries may have to wait more than one year to see their payments adjusted.
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The agency credits automation for helping it to expedite those payments.
The Social Security Administration currently plans to update all beneficiary records affected by the law by early November.
However, the agency is “working to exceed its estimate” under new commissioner Frank Bisignano, a Social Security Administration official said via email.

“Commissioner Bisignano committed to senators during his confirmation process that this would be finished ‘while the weather is warm’ and he will keep his promise,” the Social Security Administration official said.
Here’s the latest on the Fairness Act payments.

Who does the Social Security Fairness Act affect?

The Social Security Fairness Act, which was signed into law on Jan. 5, affects certain individuals who are eligible for Social Security benefits, but who also receive pensions from work that did not require the payment of Social Security payroll taxes.
Examples of those affected include teachers, firefighters and police officers; federal employees covered by the Civil Service Retirement System; and people who are covered by a foreign social security system, according to the Social Security Administration.
Notably, not everyone in those groups will receive a benefit increase, according to the agency. About 72% of state and local public employees pay Social Security taxes, and therefore were not affected by the new law, according to the agency.

The provisions that had previously been in place reduced Social Security benefits for more than 2.8 million people, according to SSA. To date, the agency has processed about 2.5 million cases, the agency said in its latest update.
Railroad Retirement Board beneficiaries also stand to receive adjusted annuity payments because of the law. New monthly annuity amounts for most individuals will begin in July, and one-time retroactive payments are due to arrive by the end of July, according to a Railroad Retirement Board spokeswoman.

How much are the benefit increases?

Individuals affected may see monthly Social Security check increases ranging from “very little” to more than $1,000 per month, according to SSA.
The changes will result in higher monthly payments ranging from $360 to $1,190, depending on individual circumstances, the Congressional Budget Office previously estimated. 
Affected beneficiaries will also see lump-sum payments dating back as far back as January 2024. Notably, Social Security benefit payments for January 2024 were received by beneficiaries in February 2024, according to the Social Security Administration.
For each beneficiary, the monthly benefit increases and any back payments are processed together, the Social Security official said.

Who is still waiting for benefit adjustments?

The Social Security Administration is now prioritizing the remaining complex cases that could not be automated, according to the Social Security official.
Those cases require additional time to manually update records to process both the retroactive and new benefits.
The roughly 300,000 individuals who are still waiting may have unique circumstances, notes David A. Weaver, a former Social Security Administration executive who currently teaches statistics at the University of South Carolina.
For example, some eligible beneficiaries who have recently died may qualify for the lump-sum retroactive payments, Weaver said. In those circumstances, the Social Security Administration would likely try to issue that money to survivors.

Others may be affected by overpayments, whereby the Social Security Administration issued benefit payments that were too high. In those cases, the agency will generally seek reimbursement for the excess sums that were issued.
In addition to the cases that require manual processing, there are people who are now newly eligible to apply for Social Security benefits as a result of the law, Weaver said.
Those individuals may need to file an application, according to the Social Security Administration. The date of the application may determine benefit start date and benefit amount.

What could happen next?

As the implementation of the Social Security Fairness Act moves to completion, it may be wise for Congress to ask the Government Accountability Office to audit that process, Weaver said.
That may allow for an evaluation of the final administrative costs for processing the benefit changes due to the law, including both the manual cases and additional new claims, as well as phone calls from the public about the changes, he said.
That investigation could also evaluate whether other agency work was sidelined as the benefit changes were processed, he said.
Have your Social Security benefits been affected by the Social Security Fairness Act? If you would be willing to share your story, email [email protected].
  More

Currently, many pass-through businesses use a workaround — the pass-through entity, or PTE, tax — to bypass the $10,000 limit on the federal deduction for state and local taxes, known as SALT.
The House-approved bill could block certain pass-through businesses from using the popular state-level tax break.
However, this provision could still face changes amid Senate negotiations.

Speaker of the House Mike Johnson, R-La., speaks to the media after the House narrowly passed a bill forwarding President Donald Trump’s agenda at the Capitol on May 22, 2025.
Kevin Dietsch | Getty Images

As Senate Republicans debate trillions of tax breaks advanced by the House, some business owners could be blocked from part of the proposed windfall, policy experts say.
If enacted as written, the House GOP’s “One Big Beautiful Bill Act” would raise the federal deduction limit for state and local taxes, known as SALT, to $40,000. That would phase out once income exceeds $500,000.

The bill would also boost a tax break for pass-through businesses, known as the qualified business income, or QBI, deduction, to 23%. But the measure would end a popular state-level SALT cap workaround for certain pass-through business owners.  
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Here’s what to know about the proposed change and who could be impacted.

SALT deduction cap ‘workaround’

Enacted via the Tax Cuts and Jobs Act, or TCJA, of 2017, there’s currently a $10,000 limit on the SALT deduction for filers who itemize tax breaks. This cap will expire after 2025 without changes from Congress. The SALT deduction was unlimited before TCJA, but the so-called alternative minimum tax reduced the benefit for some higher earners.
The cap has been a pain point in high-tax states like New York, New Jersey and California because residents can’t deduct more than $10,000 for SALT, which includes income, property and sales taxes.  

However, most states now have a “workaround” to bypass the federal SALT deduction limit for pass-through business owners, explained Garrett Watson, director of policy analysis at the Tax Foundation.

As of May 9, some 36 states and one locality, New York City, have enacted a workaround — the pass-through entity, or PTE, level tax — since the 2017 TCJA limitation, according to the American Institute of Certified Public Accountants, or AICPA.
While each state has different rules, the strategy generally involves paying individual state and local taxes through a pass-through business to sidestep the $10,000 cap, Watson said. Owners can then deduct their share of SALT paid.

How the SALT workaround could change

Certain white-collar professionals — doctors, lawyers, accountants, financial advisors and others — known as a “specified service trade or business,” or SSTB, can’t claim the qualified business income deduction once income exceeds certain limits.
As advanced, the House bill would block SSTBs from using the SALT deduction workaround, which would be “substantial” for those impacted, Watson said.
Meanwhile, some non-SSTB pass-through businesses would have two benefits under the House-approved bill. Depending on income, they could qualify for the bigger 23% QBI deduction. They could also still claim an unlimited SALT deduction via the PTE workaround, experts say.

The revised provision has faced some pushback among certain organizations.
“This loophole is likely expensive, and lawmakers and the public should demand a clear accounting of the fiscal cost to bless workarounds for this favored group,” New York University Tax Law Center deputy director Mike Kaercher said in a statement after the revised House bill text was released in late May. 
Some industry groups, such as AICPA, have urged the Senate to maintain the SALT deduction workaround for SSTBs.
If the House bill is enacted as written, SSTBs would be “unfairly economically disadvantaged” by existing as a certain type of business, AICPA wrote in a May 29 letter to the Senate.
Since many SSTBs can’t organize as a C corporation, there’s “no option to escape the harsh results of the SSTB distinction,” which could limit these professionals’ SALT deduction, AICPA wrote. More

The Trump administration has paused its plan to garnish Social Security benefits for those who’ve defaulted on their student loans.
But people’s wages are still at risk for collection efforts later this summer, the Education Dept. tells CNBC.
Here’s what borrowers should know.

Getty Images

The Trump administration paused its plan to garnish Social Security benefits for those who have defaulted on their student loans — but says borrowers’ paychecks are still at risk.
“Wage garnishment will begin later this summer,” Ellen Keast, a U.S. Department of Education spokesperson, told CNBC.

Since the Covid pandemic began in March 2020, collection activity on federal student loans had mostly been on hold. The Biden administration focused on extending relief measures to struggling borrowers in the wake of the public health crisis and helping them to get current.
The Trump administration’s move to resume collection efforts and garnish wages of those behind on their student loans is a sharp turn away from that strategy. Officials have said that taxpayers shouldn’t be on the hook when people don’t repay their education debt.
“Borrowers should pay back the debts they take on,” said U.S. Secretary of Education Linda McMahon in a video posted on X on April 22.
Here’s what borrowers need to know about the Education Department’s current collection plans.

Social Security benefits are safe, for now

Keast said on Monday that the administration was delaying its plan to offset Social Security benefits for borrowers with a defaulted student loan.

Some older borrowers who were bracing for a reduced benefit check as early as Tuesday.
The Education Department previously said Social Security benefits could be garnished starting in June. Depending on details like their birth date and when they began receiving benefits, a recipient’s monthly Social Security check may arrive June 3, 11, 18 or 25 this year, according to the Social Security Administration.
More than 450,000 federal student loan borrowers age 62 and older are in default on their federal student loans and likely to be receiving Social Security benefits, according to the Consumer Financial Protection Bureau.
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The administration’s announcement gives borrowers more time to try to get current, and to avoid a reduced benefit check down the line.
“The Trump Administration is committed to protecting Social Security recipients who oftentimes rely on a fixed income,” said Keast.

Wages are still at risk

The Education Dept. says defaulted student loan borrowers could see their wages garnished later this summer.
The agency can garnish up to 15% of your disposable, or after-tax, pay, said higher education expert Mark Kantrowitz. By law, you must be left with at least 30 times the federal minimum hourly wage ($7.25) a week, which is $217.50, Kantrowitz said.
Borrowers in default will receive a 30-day notice before their wages are garnished, a spokesperson for the Education Department previously told CNBC.

During that period, you should have the option to have a hearing before an administrative law judge, Kantrowitz said. The Education Department notice is supposed to include information on how you request that, he said.
Your wages may be protected if you’ve recently been unemployed, or if you’ve recently filed for bankruptcy, Kantrowitz said.
Borrowers can also challenge the wage garnishment if it will result in financial hardship, he added. More