The BareStory
The Trump administration is set to resume garnishing the wages of federal student loan borrowers in default, ending a multi-year pause on collections that began during the COVID-19 pandemic. The U.S. Department of Education has confirmed the plan, with a spokesperson stating that initial notices are scheduled to be sent to approximately 1,000 borrowers during the week of January 7. The number of borrowers receiving these notices is expected to increase monthly throughout 2026.
Under federal authority, the government can order employers to withhold up to 15% of a borrower's after-tax income to repay defaulted student loans. This process, known as administrative wage garnishment, also allows for the seizure of federal tax refunds and Social Security benefits. A borrower is typically considered in default after failing to make payments for more than 270 days. According to one summary, borrowers are supposed to receive a 30-day notice before garnishment starts.
Higher education expert Mark Kantrowitz stated that federal law requires garnished borrowers to be left with a minimum weekly income of at least $217.50. Estimates on the number of affected borrowers vary. The Education Department said earlier this year that over 5 million borrowers were in default, projecting the total could rise to roughly 10 million. A recent analysis of federal data found approximately 5.5 million borrowers in default and another 3.7 million more than 270 days late on payments. Preston Cooper, a researcher at a public policy think tank, said about 12 million borrowers are currently delinquent or in default.
In response to the policy change, consumer advocates recommend that affected borrowers contact the government's Default Resolution Group to explore options for bringing their loans current, such as loan rehabilitation. Betsy Mayotte, president of The Institute of Student Loan Advisors, said the timing of the resumption is unfortunate. She claimed the garnishments will coincide with premium increases for Affordable Care Act health insurance in 2026, which she said will likely place significant economic strain on low and middle-income individuals.
How it may affect me
As a U.S. reader:
• Millions of borrowers in default could have up to 15% of their after-tax pay garnished, directly reducing their personal income.
• Some individuals may have their federal tax refunds or Social Security benefits seized by the government to repay defaulted student loans.
• The policy's impact will be gradual, as the number of borrowers receiving garnishment notices is scheduled to increase monthly through 2026.
• Affected borrowers could face greater economic strain in 2026, as garnishments may coincide with projected increases in health insurance premiums.
