The Education Department has confirmed plans to initiate wage garnishments for individuals who have defaulted on their student loans starting the week of January 7, 2026. This decision marks a significant return to collections after an extended pause that began during the early stages of the COVID-19 pandemic under the Trump administration. The suspension of student loan collections was later reinforced by the Biden administration, which introduced programs aimed at helping borrowers to rehabilitate their loans.
As indicated by the department, approximately 1,000 borrowers will receive notifications regarding the garnishment of a portion of their wages to cover overdue debts, with additional notifications to follow for a larger group of borrowers. The resumption of these collections comes as part of a series of reforms aimed at overhauling the federal student loan repayment system, driven in part by the recently enacted One Big Beautiful Bill Act.
Data released from the consumer credit reporting agency TransUnion highlights the growing issue of student loan delinquency, particularly among rental applicants, where the rate of serious delinquency doubled between January and May of 2025. Currently, about 42.5 million borrowers are burdened with federal student loan debt, amounting to nearly $1.7 trillion.
Prior to May’s resumption of collections, an estimated 5 million borrowers had not made a payment in over a year, leading to their default status. The Department of Education had previously begun seizing tax refunds and Social Security benefits from defaulted borrowers, indicating a return to involuntary collection tactics after several years of relief.
Experts in the field underscore the importance of proactive engagement for borrowers. Laurel Taylor, the CEO of Candidly, emphasized the need for a holistic approach to education financing that considers various aspects of financial well-being, while Betsy Mayotte from the Institute of Student Loan Advisors advised borrowers to leverage tools available on the Department of Education’s website to navigate their repayment options effectively.
The Department will comply with federal regulations, ensuring borrowers are given at least 30 days’ notice before any garnishment action begins. This notification period will provide individuals the opportunity to contest the action, pay off the debt in full, or arrange alternative repayment plans. Under existing laws, the department can withhold up to 15 percent of a borrower’s after-tax income until their loan obligations are met.
This move represents a critical step in addressing the long-standing issues surrounding federal student loan debt and underscores the urgency for affected borrowers to stay informed and proactive about their options as the landscape for repayment shifts in the coming years.