By The U.S. Department of Education under the direction of President Trump will restart wage garnishment for borrowers who have defaulted on their federal student loans beginning in early January 2026, ending a pandemic-era suspension that has lasted several years.
A department spokesperson said initial notices will be sent to roughly 1,000 borrowers during the week of January 7, with additional notices rolling out gradually in the months that follow. Borrowers will receive at least 30 days’ advance notice before any garnishment begins, allowing time to contest the action, resolve the debt, or set up alternative payment arrangements, writes CNBC.
Federal law gives the government sweeping authority to collect unpaid student loans. That includes the ability to seize tax refunds, offset certain federal benefits such as Social Security payments, and garnish wages. For wage garnishment, the government may withhold up to 15% of a borrower’s disposable earnings, defined as income after mandatory deductions. Statutory safeguards require that borrowers retain a minimum weekly amount equal to 30 times the federal minimum wage—currently about $217.50 based on the $7.25 hourly rate.
More than 5 million borrowers are currently in default, a status triggered after missing payments for more than 270 days. Total federal student loan debt now exceeds $1.6 trillion and is held by roughly 42 million Americans. Federal officials have previously warned that the number of borrowers in default could climb toward 10 million as repayment obligations resume amid lingering economic pressures.
The garnishment restart follows earlier moves this year to reinstate other collection tools, including the interception of tax refunds. Borrower advocates have urged those at risk of default to contact the Education Department’s Default Resolution Group, noting that options such as loan rehabilitation—typically involving a series of reduced payments—or consolidation into new repayment plans can restore loans to good standing.
The policy shift arrives alongside a broader debate over the equity and effectiveness of recent student loan “relief” efforts. Critics argue that large-scale pauses and forgiveness proposals disproportionately benefit borrowers with college degrees rather than low-income Americans without access to higher education.
Data from the Pew Research Center underscores the concern. Pew has found “a growing earnings gap between young college graduates and their counterparts without degrees,” a divide that “widened as a result of the coronavirus pandemic.” College graduates, on average, also experience better employment prospects, improved health outcomes, and lower divorce rates than non-graduates. Despite that, the federal government spent an estimated quarter-trillion dollars during the pandemic-era pause on student loan repayments, with proposals that would push the cost even higher.
As wage garnishment resumes, Education Department officials are urging borrowers to verify their loan status and engage with available repayment or rehabilitation options. For millions still in default, early action may determine whether the return of collections results in manageable payment plans—or involuntary deductions from already strained paychecks.
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