Student loan borrowers in default may see wages garnished in 2026

Trump Administration to Resume Wage Garnishment for Student Loan Defaulters

The Trump administration announced Tuesday it will restart wage garnishment for defaulted student loan borrowers beginning in early January, marking a significant shift in federal collection practices that have been largely suspended since the pandemic began.

According to the Department of Education, approximately 1,000 borrowers will receive garnishment notices during the week of January 7, with plans to gradually increase the scale of notifications each month thereafter. The department emphasized that collection activities will commence “only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans,” giving affected individuals a mandatory 30-day notice before their wages can be garnished.

The announcement represents the latest step in unwinding pandemic-era relief measures for student loan borrowers. In May, the administration ended the payment pause that had been in place since March 2020, and began collecting on defaulted debt through tax refund withholding and other federal payment offsets.

Millions of borrowers currently fall into the default category, which occurs when payments are 270 days past due. For these individuals, the resumption of wage garnishment means the government can legally take a portion of their paychecks to recover the outstanding debt without going through traditional court processes.

The return to wage garnishment follows a period of unprecedented leniency for federal student loan borrowers. After payments restarted in October 2023, the Biden administration had implemented a one-year grace period to ease the transition. Until the Trump administration’s policy changes earlier this year, no federal student loans had been referred for collection since the pandemic began in March 2020.

The Biden administration had previously attempted to provide broad student loan forgiveness, proposing plans that would have canceled up to $20,000 in debt for eligible borrowers. However, these efforts were ultimately blocked by federal courts, leaving the administration to pursue more targeted relief programs through regulatory changes.

Consumer advocates have responded critically to the decision to resume wage garnishment. Persis Yu, deputy executive director for the Student Borrower Protection Center, called the move “cruel, unnecessary, and irresponsible” in a statement responding to the announcement.

“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,” Yu said. “As millions of borrowers sit on the precipice of default, this Administration is using its self-inflicted limited resources to seize borrowers’ wages instead of defending borrowers’ right to affordable payments.”

The resumption of wage garnishment occurs against the backdrop of ongoing economic challenges for many Americans. While unemployment remains relatively low, concerns about inflation, housing costs, and overall affordability continue to strain household budgets across the country.

Student loan experts recommend that borrowers at risk of default explore options including income-driven repayment plans, which can significantly reduce monthly payments based on income and family size. The Fresh Start program, launched during the Biden administration, also provides pathways for defaulted borrowers to restore their loans to good standing.

The Education Department has not specified how quickly it plans to scale up garnishment notices beyond the initial January wave, though the gradual approach suggests the department may be attempting to balance collection needs with concerns about the economic impact on affected borrowers.

The federal student loan portfolio currently includes approximately 43 million borrowers with over $1.6 trillion in outstanding debt, representing one of the largest consumer debt categories in the United States after mortgages.