Student loan borrowers in default could face wage garnishment starting in 2026.
The Trump administration announced on Tuesday that it will commence garnishing wages for student loan borrowers who have defaulted on their payments, an action set to take effect in early 2024. This initiative is aimed at addressing the growing number of individuals who have fallen behind on their loans, which now totals millions, as they are classified as being at least 270 days overdue on their payments.
Beginning the week of January 7, approximately 1,000 borrowers will receive notifications regarding this wage garnishment, with a commitment from the Department of Education to increase the number of notices sent each month thereafter. Federal law mandates that borrowers receive at least 30 days’ notice prior to the garnishment of their wages, allowing them a window to address their repayment options.
The administration has further underscored that collection efforts will not commence until borrowers—both students and parents—are provided adequate notice and opportunities to fulfill their loan obligations. This policy marks a significant shift following the cessation of the pandemic-related freeze on student loan payments, which had been in effect since March 2020, thus pausing all collection actions, including those against defaulted loans.
In May 2023, the Trump administration ended this moratorium, leading to resumed collection actions, which involve withholding tax refunds and other federal payments to borrowers in default. The restart of payments began in October 2023, although the Biden administration has since extended a one-year grace period for borrowers.
Efforts by the Biden administration to broadly forgive student loans have faced legal challenges, limiting their ability to implement widespread relief measures for borrowers. Critics of the recent wage garnishment announcement, such as Persis Yu, deputy executive director for the Student Borrower Protection Center, have expressed their disapproval. Yu characterized the decision as excessively harsh at a time when many families are grappling with stagnant wages and a rising cost of living.
As the federal government prepares to implement these garnishments, the ongoing dialogue surrounding student loan reform remains a pivotal issue, with significant implications for millions of borrowers struggling with debt in an evolving economic landscape.
