"A borrower is in default when they have not made loan payments in more than 270 days. Once that happens, the federal government can try to collect on the debt by seizing tax refunds and Social Security benefits, and also by ordering an employer to withhold up to 15% of a borrower's pay. Borrowers should receive a 30-day notice from the Education Department before this wage garnishment begins."
"Betsy Mayotte, the president and founder of The Institute of Student Loan Advisors, says even though borrowers have expected this, the timing is unfortunate. "It will coincide with the increase in health care costs for many of these defaulted borrowers," she said, referring to the premium increases for Affordable Care Act health insurance that kick in in 2026. "The two will almost certainly put significant economic strain on low and middle income borrowers.""
The U.S. Education Department will resume garnishing wages from federal student loan borrowers in default beginning early 2026, with initial notices expected the week of January 7 and increases in notices monthly. A borrower is in default after more than 270 days without payment, triggering potential seizure of tax refunds and Social Security benefits and employer withholding of up to 15% of pay. Borrowers will receive a 30-day notice before garnishment begins. About 5.5 million borrowers are currently in default, with another 3.7 million over 270 days late and 2.7 million in early delinquency. The timing may amplify financial strain as Affordable Care Act premiums rise in 2026.
Read at www.npr.org
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