- Education Department to begin garnishing wages for student loan borrowers in default.
- Critics of the garnishment actions say many student loan borrowers are already facing financial burdens with possible health care cost increases.
- The Trump administration said it is simplifying the Education Department and helping to curb rising tuition costs.
Student loan recipients who are in default may soon find fewer dollars in their paychecks.
The Trump administration announced this week that it will soon begin garnishing the wages of individuals who have failed to repay their student loans.
The Department of Education will send notices to approximately 1,000 borrowers the week of Jan. 7, 2026 — with more notices to come at an increasing scale each month, according to The Associated Press.
The wage garnishment announcement marks a departure from past handling of student loan borrowers in default. Since March 2020, no federal student loans had been referred for collection — including those in default — until the Trump administration’s changes earlier this year.
Persis Yu, deputy executive director for the Student Borrower Protection Center, criticized the decision to begin garnishing wages, telling The Associated Press that the department had failed to sufficiently help borrowers find affordable payment options.
“At a time when families across the country are struggling with stagnant wages and an affordability crisis, this administration’s decision to garnish wages from defaulted student loan borrowers is cruel, unnecessary, and irresponsible,” Yu said in a statement.
“As millions of borrowers sit on the precipice of default, this administration is using its self-inflicted limited resources to seize borrowers’ wages instead of defending borrowers’ right to affordable payments.”
Many Americans defaulting on federal student loans
Millions of student loan borrowers are considered in “default” — meaning they are 270 days past due on their payments.
The federal government can try to collect on the debt by seizing tax refunds and Social Security payments, including disability benefits.
The holder of a defaulter’s loan can also order a borrower’s employer to withhold up to 15% of his or her disposable pay to collect their defaulted debt without involving the courts, according to the U.S. Government’s Federal Student Aid site.
“This withholding — or ‘garnishment’ — continues until your defaulted loan is paid in full or removed from default,” the site noted.
DOE must provide borrowers 30 days notice before wages can be garnished.
The department said it will begin collection activities “only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans,” according to The Associated Press.
The federal student aid site notes that student loan borrowers in default can avoid wage garnishment by negotiating repayment terms with the loan holder.
Impacted borrowers can also request a hearing to review circumstances of the loan.
Education Secretary McMahon: Trump administration simplifying ‘overly complex’ repayment process
In May, the Trump administration ended the pandemic-era pause on student loan payments, beginning to collect on defaulted debt through withholding tax refunds and other federal payments to borrowers.
The move ended a period of leniency for student loan borrowers. Payments restarted in October of 2023, but the Biden administration extended a grace period of one year, according to The Associated Press.
The Biden administration tried multiple times to give broad forgiveness to student loans, but those efforts were eventually stopped by courts.
Betsy Mayotte, the president and founder of The Institute of Student Loan Advisors, told NPR that even though borrowers have expected a resumption of wage garnishments, the timing is unfortunate.
“It will coincide with the increase in health care costs for many of these defaulted borrowers,” she said, referring to the premium increases for Affordable Care Act health insurance that kick in in 2026.
“The two will almost certainly put significant economic strain on low and middle income borrowers.”
Education Secretary Linda McMahon has stressed that the Trump administration is simplifying the “overly complex” repayment process and reducing borrowing amounts to “help curb rising tuition costs,” according to an ABC News report.
Her department is also attempting to move the student debt portfolio and potentially transfer it to the Department of Treasury. McMahon has said that she has discussed moving the loans with Treasury Secretary Scott Bessent, but no decisions have been made yet.