Student loan borrowers in default could see wages garnished in early 2026

"Starting the week of Jan. 7, the Education Department will begin sending notices about paycheck deductions to about 1,000 of five million borrowers in default. The Trump administration will begin to garnish the pay of student loan borrowers in January, the Education Department said Tuesday, stepping up a repayment enforcement effort that began this year. Beginning the week of Jan. 7, roughly 1,000 borrowers who are in default will receive notices informing them of their status, according to an email from the department. The number of notices will increase on a monthly basis."

"The collection activities are "conducted only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans," according to the email, which was unsigned. The announcement comes as many Americans are already struggling financially, and the cost of living is top of mind. The wage garnishing could compound the effects on lower-income families contending with a stressed economy, employment concerns and health care premiums that are set to rise for millions of people."

"The email did not contain any details about the nature of the garnishment, such as how much would be deducted from wages, but according to the government's student aid website, up to 15% of a borrower's take-home pay can be withheld. The government typically directs employers to withhold a certain amount, similar to a payroll tax. A borrower should be sent a notice of the government's intent 30 days before the seizure begins, according to the website, StudentAid.gov. The administration ended a five-year reprieve on student loan repayments in May, paving the way for forced collections - meaning tax refunds and other federal payments, like Social Security, could be withheld and applied toward debt payments."

The Education Department will start sending notices the week of Jan. 7 to roughly 1,000 borrowers in default and will increase notices monthly. Wage garnishment is part of a stepped-up repayment enforcement and follows the end of a five-year reprieve on student loan repayments in May. Up to 15% of a borrower’s take-home pay can be withheld and employers are typically directed to withhold amounts similar to a payroll tax. Borrowers should receive a 30-day notice before seizure. Forced collections can include withholding tax refunds and other federal payments, potentially harming lower-income families.

Read at Boston.com