The Trump administration is preparing to recommence wage garnishment for federal student loan borrowers who are in default, with notifications scheduled to be dispatched starting Wednesday. This resumption follows a pandemic-era suspension of collection activities, which allowed many borrowers to temporarily avoid garnishments.
A spokesperson from the Department of Education informed that approximately 1,000 borrowers in default will receive initial notices in the first week of January, with a gradual increase in the number of notifications each month thereafter. Borrowers faced with default may have up to 15% of their after-tax wages garnished, alongside potential reductions in tax refunds and certain federal benefits, though a minimum income threshold is safeguarded from such garnishments.
Notices must be delivered at least 30 days prior to the commencement of wage garnishment, allowing borrowers to either repay their debts or contest the garnishment process. The notifications will present borrowers with the opportunity to enter into voluntary repayment agreements and to request a hearing if they wish to challenge the garnishment.
During such hearings, borrowers can dispute the legitimacy, amount, or enforceability of their debt. They may also argue that garnishing 15% of their disposable income would impose significant financial strain or inquire about the appropriateness of garnishment if they have held employment for less than 12 months following involuntary job separation.
Consumer advocates highlight that borrowers in default can sidestep wage garnishment through direct communication with the federal government, asking for a hearing, or by enrolling in various loan rehabilitation or consolidation initiatives. It’s crucial to note that borrowers are protected from employment discrimination related to the garnishment. If faced with repercussions due to wage garnishment, they retain the right to pursue legal action against their employer and can limit the information shared with their employer strictly to comply with the garnishment order.
Currently, over 5 million federal student loan borrowers are reported to be in default, a figure that could potentially surge as repayment terms are modified. Data from the Education Department reveals that, as of June 2025, there were 5.3 million borrowers in default, accounting for 7% of the $1.58 trillion total federal student loan portfolio. As discussions around student debt continue, there remains a glimmer of hope for borrowers seeking pathways to relieve their obligations through the various options available to them.