For the first time in years, borrowers who have stopped paying their student loans may have their wages garnished to repay their debts. The return of wage garnishment for student borrowers comes as the Trump administration continues to enforce student debt collection more aggressively, a policy that could impact millions of Americans.
Wage garnishments for student loan debt to return in January
The Department of Education announced Tuesday that, beginning early next year, some individuals who have defaulted on their student loans will have their wages garnished to repay their debts. Those impacted by the debt collection policy will receive a notification from the government of its intentions before the beginning of wage garnishment.
“We expect the first notices to be sent to approximately 1,000 defaulted borrowers the week of January 7, and the notices will increase in scale on a month-to-month basis,” the DoE said in a statement.
The garnishment policy applies to people who have defaulted on their loans, defined as borrowers who have not made a payment for at least 270 days. While it is unclear how many people will have a portion of their wages held back to pay the government, data released earlier this year showed that over 5 million people were in student loan default in the United States, with almost 4 million other borrowers delinquent after having gone more than 90 days without making a payment. The move to go after defaulted borrowers’ wages comes as new regulations passed in the GOP-backed “One Big Beautiful Bill Act” put new limits on the amounts of loans borrowers can acquire, while also placing new limits on deferment and repayment options.
Ending pandemic-era pause on debt collection
The return of wage garnishment continues the Trump administration’s policy of ramping up student debt collection, reversing pandemic-era policies that eased or paused student debt collection. The first Trump administration paused student loan repayments in March 2020 as part of its approach to economic relief during the COVID-19 pandemic. The student loan repayment pause was then extended several times under President Joe Biden, who also ramped up efforts to forgive student debt. The Biden administration extended student loan forgiveness to over 5 million people, though the Supreme Court blocked greater efforts by Biden to wipe out student debt systematically.
The current Trump administration has signaled for months that it would ramp up student loan collection efforts, with the administration announcing in April that it would resume collecting on defaulted debts starting in May. The renewal of wage garnishment next year continues this more aggressive debt collection policy. Although the Department of Education has not given many details about the current plan for wage garnishment, existing policy holds that up to 15% of a borrower’s wages can be withheld for student loan debt repayment. The government can also withhold Social Security payments and tax refunds for debt collection purposes. The renewed debt collection efforts are likely to disproportionately impact low-income Americans, who are more likely to be in default.
Over 40 million Americans hold over $1.6 trillion in combined student loan debt, creating a massive burden on the country’s population. As the Trump administration gears up to take more actions to collect that debt, many people are set to feel the financial impact of their student loans for the first time in years.