Student loan borrowers in default will soon face wage garnishment and the withholding of federal benefits as the Trump administration moves to resume debt collection after a pause started during the COVID-19 pandemic.
The U.S. Department of Education began sending notices to delinquent borrowers outlining plans to restart wage garnishment beginning Jan. 7, 2026, USA Today reports.
As previously shared by AFROTECH™, nearly 1,000 borrowers will receive notice in the first round that their wages will be garnished, with that number expected to grow over time.
What Is Wage Garnishment?
Wage garnishment is a legal process that allows a creditor or agency to withhold a portion of an employee’s paycheck to repay a debt, typically after obtaining a court judgment, according to USA Today. The amount withheld depends on the type of debt and applicable state and federal laws.
Garnishment generally ends once the employee repays their debt, the order is revoked, or the time period specified in the order expires.
When Do Student Loans Go Into Default?
For federal student loans, a borrower becomes delinquent the first day after a missed payment, which can result in late fees or damage to their credit score, per USA Today. However, a loan does not enter the default stage until after 270 days of missed payments, the Federal Student Aid website states.
Once a borrower enters default, the website also share that the Department of Education’s Default Resolution Group sends a notice outlining the amount owed and available options to resolve the default, including applying for relief programs, requesting a lower monthly payment, or asking for a hearing.
If no payment is received or action taken for more than 360 days, the federal government can collect the debt through wage garnishment or other methods without a court order, per the Federal Student Aid website.
If officials plan to use the Treasury Offset Program — a centralized system for collecting debt owed to federal and state agencies like child support and defaulted loans — the borrower will receive written notice from the U.S. Department of the Treasury at least 65 days before any withholding begins.
In cases involving federal student loans, the government can withhold up to 15% of a borrower’s disposable pay, seize 100% of a tax refund, and deduct up to 25% of Social Security benefits.
More information can be found here.
How Many Student Loan Borrowers Are In Default?
As of June 30, 2025, almost 5.3 million borrowers have been in default for nearly a year, and many since before the pandemic, per The Washington Post. An estimated 6 million student loan borrowers were at least 60 days late on payments as of August 2025, according to the Urban Institute.
On Dec. 9, 2025, the Education Department also announced a proposed settlement to dismantle former President Joe Biden’s Saving on a Valuable Education (SAVE) Plan, AFROTECH™ noted. The program let some borrowers make $0 monthly payments and offered forgiveness to others after as few as 10 years. The settlement will require court approval.
More than 7 million borrowers enrolled in SAVE have been in administrative forbearance since June 2024 and didn’t have to make payments, per USA Today. Interest resumed on those loans on Aug. 1, 2025.
“For four years, the Biden Administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their postsecondary education or never even went to college themselves, simply for a political win to prop up a failing Administration,” Under Secretary of Education Nicholas Kent said in a statement announcing the proposal.
“The Trump Administration is righting this wrong and bringing an end to this deceptive scheme. The law is clear: if you take out a loan, you must pay it back. … American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies,” he added in a press release per the U.S. Department of Education.
