U.S. President Donald Trump recently made headlines by announcing the establishment of the “Trump-class” battleship during a media statement held at his Mar-a-Lago estate in Palm Beach, Florida, on December 22, 2025. This announcement, while notable in the realm of military advancement, coincided with significant developments in the federal student loan system.
A spokesperson for the U.S. Department of Education confirmed that starting in early January, the Trump administration will reinstate wage garnishment for student loan borrowers who are in default. This marks a pivotal move as it is the first instance of paycheck garnishment since the suspension of collection activities related to student loans during the Covid pandemic.
Beginning the week of January 7, approximately 1,000 borrowers are anticipated to receive notices regarding administrative wage garnishment, with the number of affected individuals expected to grow in the subsequent weeks. This change underscores the government’s authority in collecting on federal debts, which includes the ability to seize federal tax refunds, wages, and Social Security benefits.
The Education Department has the capacity to withhold up to 15% of a borrower’s after-tax income to address their outstanding debt. However, regulations stipulate that borrowers must retain a minimum amount, equivalent to 30 times the federal minimum hourly wage of $7.25, leaving them with at least $217.50 per week.
As the administration moves forward with these changes, the balance between combating debt and providing financial stability for borrowers will be crucial. The focus on responsible debt collection aims to support economic recovery while addressing the longstanding challenges within the student loan system.