Some student loan borrowers may discover an alarming letter in their mailbox in the coming weeks: A notice that the federal government is coming for their paycheck.
The Department of Education has confirmed its plans to begin garnishing wages of student loan borrowers who are in default, dusting off a debt collections tool it hasn’t used in nearly six years. Notices will go out to about 1,000 defaulted borrowers starting Jan. 7 and “will increase in scale on a month-to-month basis,” the Education Department said in an email to U.S. News. The department wouldn’t specify how it planned to select the initial borrowers who would have wages seized, and it wouldn’t say how many of the millions of borrowers currently in default would ultimately be sent notices.
The Trump administration announced in April 2025 that it would be resuming collections of federal student loan debt the following month, saying it planned to collect unpaid debts using methods such as garnishing wages and seizing tax refunds. However, it hasn’t pursued the wage garnishment avenue until now.
Still, the restart is likely to catch many borrowers off-guard. Loan payments were paused for years, and even after they resumed, the government didn’t attempt to collect on defaulted debts by garnishing wages. Experts say it has likely been years since many borrowers have looked at their loan balance, much less made a payment.
Some consumer groups blasted the decision to restart wage garnishments, arguing that seizing portions of paychecks would further add to the challenges faced by those in default.
“At a time when families across the country are struggling with stagnant wages and an affordability crisis, this administration’s decision to garnish wages from defaulted student loan borrowers is cruel, unnecessary and irresponsible,” says Persis Yu, deputy executive director and managing counsel at Protect Borrowers, a nonprofit advocacy group.
[Read: Best Private Student Loans.]
Who Is At Risk of Having Wages Garnished?
Most federal student loans go into default after the borrower has gone at least 270 days without making a scheduled payment, and any borrower in default is at risk of having a portion of their paycheck withheld by the government and used to pay off their outstanding debt. Loans that are fewer than 270 days past due are considered delinquent.
More than 5 million federal student loan borrowers are currently in default, and millions of others are in late-stage delinquency, according to the Education Department.
The government can seize up to 15% of a defaulted borrower’s after-tax paycheck to pay toward the defaulted debt, and it can continue to garnish wages until the full balance is due or the default status is resolved. The Education Department is required to send borrowers a notice 30 days before it begins garnishing paychecks. The notice will provide options for addressing the default status as well as instructions for requesting a hearing to dispute the action.
[Read: Best Student Loan Refinance Lenders.]
A ‘Particularly Precarious Moment’
When the Education Department initially announced plans to restart collections activities last spring, it cited data that suggested nearly a quarter of its student loan portfolio could soon be in default if trends continue. This could be attributed to numerous reasons, ranging from economic factors like inflation to confusion over frequent changes to the student loan landscape.
A pandemic-induced payment pause lasted for three and a half years, and the government refrained from collections activities long after the pause ended. As a result, many borrowers haven’t made a loan payment or budgeted for one in more than five years. Experts and observers say some may have no idea they’re default.
Wage garnishment isn’t the only thing struggling student loan borrowers have had to worry about. In early December, the Department of Education reached a proposed settlement agreement to end the Saving on a Valuable Education (SAVE) repayment plan. This plan, introduced by the Biden administration in 2023, promised expedited loan forgiveness and monthly payments as low as $0 for low-income borrowers. More than 7 million borrowers are currently enrolled in the SAVE plan and will now need to switch to another repayment plan.
The financial jolt that a 15% paycheck cut would bring thanks to garnishment may be too steep for some struggling borrowers to absorb.
More than four in 10 federal student loan borrowers say they’ve had to choose between making loan payments and covering their basic needs, according to a December survey published by The Institute for College Access and Success, a nonprofit research and advocacy organization. That survey also found that 20% of respondents say they’re currently in delinquency or default on their student loans.
“You add all of that in and I think you have a particularly precarious moment in the portfolio for them to really pull this punitive lever,” says Jessica Thompson, the organization’s executive vice president.
Thompson says some types of borrowers default at a higher percentage than others. For example, those who started school but never completed it are more likely to fall behind on loan payments. “That’s absolutely the biggest risk factor that we see across the board for defaulting, which makes sense because you weren’t able to get the return on that investment,” she says.
Other than saying it plans to increase wage garnishments on a monthly basis, the administration didn’t indicate how many defaulted borrowers it may target. If collections efforts expand to millions of borrowers, experts say it could be felt across the economy.
“A large-scale implementation of wage garnishments for millions of people could have an effect on the overall macroeconomy,” says Jonathan Ernest, an assistant professor of economics at Case Western Reserve University’s Weatherhead School of Management. “Not only would this mean fewer dollars in the pockets of consumers to spend on goods and services, but it could lead to more defaults on home and auto loans as these individuals have less take-home pay to allocate toward their expenses.”
Thompson says garnishing wages from millions of people would likely require additional staffing to handle the administrative workload, something the administration has shown it doesn’t have an appetite for.
“I have significant doubts that they would have the capacity to ramp up garnishments to that extreme level,” she says.
What You Should Do Now
Check Your Loan Account and Update Your Contact Information
All federal student loan holders should log into their Federal Student Aid account and check the status of their loan to confirm whether their payments are up to date. Take note of other details, such as the name of your loan servicer.
However, it’s also important to check that your mailing address and email address in the system are also current. While the Education Department is required to send you a notice 30 days ahead of seizing your wages, it has no obligation to ensure your actually received it. Missing a notice can cost you time and money.
What to Do if Your Loan Is Delinquent
If your federal student loan is past due, it’s crucial to either pay the overdue amount to bring your balance in good standing or to reach out immediately to your loan servicer to work out other options to prevent default. You generally have more options before you go into default.
Your loan servicer may be able to provide solutions such as a temporary forbearance or an income-based repayment plan. Even if you aren’t near defaulting, it’s important to resolve delinquent loans as soon as possible. Federal student loans that are 90 days past due are reported to the national credit bureaus, which can harm your credit score.
What to Do if Your Loan Is in Default
Once your loan goes into default, it typically moves out of the hands of the loan servicer and over to the Education Department’s Default Resolution Group. At this stage, you have three main options. First, you can pay off the full balance of the loan, although that solution is out of reach for most borrowers.
Your other options are loan rehabilitation or loan consolidation. Loan rehabilitation is a one-time option that generally requires you to agree to make nine on-time “reasonable” payments based on what the loan holder determines you can afford. Once you make all nine payments, you are removed from default.
Loan consolidation involves paying off your defaulted loan with another loan. Because your accrued interest will also roll into the new consolidation loan, you’ll likely face higher monthly payments after consolidating.
If you’re in default and receive a notice for wage garnishment, you’ll also have the option to request a hearing to dispute it. If you request the hearing within 30 days of receiving the notice, wage garnishments will be paused until a ruling is made after the hearing.
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If You’re in Student Loan Default, Trump Might Start Garnishing Your Wages. Now What? originally appeared on usnews.com
