Social Security Overpayment for a Grandchild: Recovery Rules and Waiver Options

An overpayment notice from Social Security is alarming at the best of times. When it's about a grandchild you're raising — and the agency wants to claw back hundreds or thousands of dollars from the child's monthly benefit — it can feel catastrophic. But the recovery rules have changed significantly in favor of low-income families, and you have real options.

What an Overpayment Notice Means

SSA determined that the child received more in benefits than they were entitled to during a specific period. Common reasons for grandchild overpayments include:

• A parent's disability status changed and SSA didn't adjust the child's auxiliary benefit in time
• The child's living arrangement changed without timely notification
• SSA recalculated the worker's Primary Insurance Amount and the child's share dropped
• The child turned 18 and was no longer in qualifying school enrollment

The notice will state the overpayment amount and that SSA plans to recover it by withholding from future benefit checks.

The 10% Withholding Cap

Before 2024, SSA's default was to withhold 100% of the child's monthly benefit until the overpayment was recovered — effectively cutting the check to zero. That changed in spring 2024. The default withholding rate for Title II beneficiaries is now 10% of the monthly benefit amount (or $10, whichever is greater).

If the child receives $800 per month, SSA will withhold $80 per month toward the overpayment rather than stopping payments entirely. This protects the household from sudden income loss while gradually recovering the debt.

You can request a different withholding rate if even 10% creates hardship. Contact SSA and explain your financial situation — they have discretion to lower the rate further.

Two Ways to Fight an Overpayment

You have two separate avenues, and you can use both:

Request for Reconsideration (Form SSA-561)

If you believe the overpayment calculation is wrong — the amount is incorrect, the period is wrong, or the child was actually entitled to the benefits — file SSA-561 within 60 days of receiving the notice (plus 5 days presumed mailing). This challenges the factual basis of the overpayment determination.

Gather evidence showing why the payments were correct: the child's living arrangement during the disputed period, school enrollment records, medical documentation of a parent's disability status, or anything else that contradicts SSA's finding.

Request for Waiver (Form SSA-632-BK)

Even if the overpayment is factually correct — the child really was overpaid — you can request that SSA waive recovery entirely. There is no deadline for filing a waiver request. You must show two things:

1. The overpayment was not your fault. You didn't cause it through misrepresentation, failure to report, or accepting payments you knew were wrong.
2. Recovery would defeat the purpose of the Social Security Act (cause financial hardship) or be against equity and good conscience (you changed your financial position relying on the payments and can't undo it).

For kinship caregivers on fixed incomes, the hardship argument is often strong. Document your monthly expenses, income sources, and the impact that benefit reduction would have on the child's welfare.

Filing Both Simultaneously

You can challenge the amount with SSA-561 and request a waiver with SSA-632 at the same time. If the reconsideration reduces the overpayment amount, your waiver request then applies to the smaller remaining balance.

Protecting the Child's Benefits During the Process

If the notice also says a child's disability benefits are ending for medical reasons, a separate protection may apply: filing that medical reconsideration within 10 days of notice receipt lets you elect continued benefits while the appeal is pending. For an overpayment-only notice, use the 60-day reconsideration and waiver options above; do not assume either filing window automatically suspends withholding.

Our Social Security Benefits for Grandchildren guide includes an appeal deadline tracker and a financial hardship worksheet designed for the waiver application, organized around the specific expenses and income sources common in kinship households.

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