The Trump administration has announced plans to resume aggressive debt collection measures on federal student loans, including the garnishment of wages for borrowers in default, beginning in early January.
Eko Hot News reports that the U.S. Department of Education confirmed the move on Tuesday, noting that it will be the first time since the COVID-19 pandemic that defaulted borrowers’ paychecks will be subject to seizure by the federal government.
According to a spokesperson for the Department of Education, the wage garnishment process is expected to begin during the week of January 7, when approximately 1,000 defaulted student loan borrowers are expected to receive official notices of administrative wage garnishment.
The spokesperson added that after the initial phase, the number of borrowers receiving such notices will steadily increase as the department expands its nationwide collection efforts.
Under U.S. law, the federal government has broad authority to collect unpaid debts, including the power to seize federal tax refunds, garnish wages, and withhold portions of Social Security retirement and disability benefits.
The Department of Education is legally permitted to garnish up to 15 percent of a borrower’s after-tax income to recover defaulted student loan debt.
However, federal law requires that borrowers be left with a minimum level of income. Higher education expert Mark Kantrowitz explained that borrowers must retain at least 30 times the federal minimum hourly wage of $7.25 per week, which amounts to $217.50.
The renewed enforcement comes at a time when many student loan borrowers are already under financial strain due to a weakening labour market and ongoing changes to the federal student loan system.
Borrowers have also faced difficulties accessing relief programs in recent months, adding to concerns about their ability to remain current on loan repayments.
More than five million federal student loan borrowers are currently in default, according to figures released earlier this year by the Department of Education.
The department has warned that the number of borrowers in default could rise sharply, potentially reaching nearly 10 million in the coming months if economic conditions worsen.
Overall, more than 42 million Americans hold student loan debt, with the total outstanding balance exceeding $1.6 trillion, making it one of the largest sources of consumer debt in the United States.
Consumer advocates are urging borrowers in default to act quickly to avoid wage garnishment and other penalties.
They advise affected individuals to contact the Department of Education’s Default Resolution Group to explore options for bringing their loans back into good standing.
Available options include enrolling in loan rehabilitation programs, which allow borrowers to make a series of agreed-upon payments to remove their loans from default status.
Advocates stress that early engagement with federal authorities is critical, as wage garnishment can significantly reduce take-home pay and worsen financial hardship for struggling households.
