The U.S. Education Department has announced that it will resume wage garnishments for student loan borrowers in default beginning in early 2026, following a prolonged pause due to the COVID-19 pandemic. This decision will affect individuals who have not made payments on their loans for more than 270 days. According to department officials, the first notices of garnishment are expected to be sent to around 1,000 defaulted borrowers in the week of January 7, with more notifications anticipated to roll out monthly throughout the year.
When borrowers default, the federal government has the authority to recover the debt by seizing tax refunds and Social Security benefits, as well as garnishing up to 15% of a borrower’s wages. The Education Department will provide a 30-day notice to borrowers before enacting wage garnishment.
Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, expressed concern over the timing of this decision. She noted that it coincides with rising healthcare costs due to premium increases for Affordable Care Act insurance expected in 2026, which may significantly impact low and middle-income borrowers already facing financial challenges.
Currently, approximately 5.5 million borrowers are classified as being in default, based on recent analyses of federal student loan data. An additional 3.7 million borrowers are more than 270 days late on their payments, while 2.7 million are in the early stages of delinquency. In total, around 12 million borrowers, which represents more than one in four federal student loan borrowers, are either delinquent or in default.
This resumption of wage garnishment practices marks a critical juncture for those affected by student loans, highlighting the ongoing financial burden for millions of Americans. As the Education Department prepares to implement these measures, it remains vital for borrowers to stay informed about their loans and seek assistance to navigate their options effectively.