The Trump administration will resume garnishing wages from federal student loan borrowers in default beginning early January 2026, ending a nearly five-year pandemic-era pause and affecting millions of Americans struggling with education debt, according to the U.S. Department of Education.
First Wave Targets 1,000 Borrowers
The Department of Education expects to send initial wage garnishment notices to approximately 1,000 defaulted borrowers during the week of January 7, with the number increasing monthly thereafter, a department spokesperson told Fox News Digital. The government can order employers to withhold up to 15 percent of workers’ after-tax wages to apply toward unpaid student loans under federal law.
“All FSA collections activities are required under the Higher Education Act of 1965 and Debt Collection Improvement Act of 1996 and conducted only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans,” the Department of Education stated. Federal regulations require borrowers in default to receive at least 30 days’ notice before wage garnishment begins.
Default Crisis Reaches Historic Proportions
More than 5 million borrowers were in default when the Education Department announced in May it would resume involuntary collections through the Treasury Department’s offset program, which uses measures including withholding tax refunds, federal salaries, and Social Security benefits, according to CBS News. The department predicted that an additional 4 million borrowers could enter default in the coming months, meaning nearly 25 percent of all student loan borrowers would be in default.
TransUnion research published in June revealed that approximately 5.8 million federal loan borrowers were at least 90 days overdue on payments as of April 2025, representing around 31 percent of borrowers with payment obligations. This delinquency rate marked the highest level ever documented and represented a 205 percent increase from February 2025.
“In a time when families nationwide are grappling with stagnant incomes and a crisis of affordability, this Administration’s choice to garnish wages from those in default is cruel, unnecessary, and irresponsible,” stated Persis Yu, Deputy Executive Director and Managing Counsel at Protect Borrowers.
Five-Year Pause Ends Amid Controversy
The first Trump administration paused student loan repayments with no interest accruing in March 2020 at the onset of the COVID-19 pandemic. After several extensions under the Biden administration, payments resumed in October 2023 when Congress blocked further extensions.
The current Trump administration announced in May 2025 that it would restart the Treasury Offset Program on May 5, marking the first collections on defaulted loans since March 2020. The announcement criticized the Biden-Harris administration for refusing to lift the collections pause and for keeping borrowers in “confusing limbo.”
The Wall Street Journal reported that the Education Department announced its wage garnishment plans on Tuesday, with the department stating that garnishment would occur “only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans”.
Advocacy Groups Sound Alarm
Student loan advocacy organizations condemned the administration’s approach to collections. Protect Borrowers stated in a press release that “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”.
The criticism comes as 42.7 million borrowers currently owe more than $1.6 trillion in student debt, with almost 1.9 million borrowers unable to begin repayment due to a processing pause implemented by the previous administration, according to the Department of Education. Since August 2024, the department has not processed applications for enrollment in repayment plans, including Income-Based Repayment, Income-Contingent Repayment, or PAYE.
Long-Term Implications
The resumption of wage garnishment represents a significant shift in federal student loan policy and could have substantial financial consequences for millions of Americans. The Guardian reported that borrowers falling into delinquency experienced substantial credit score declines, averaging 60 points.
The administration’s collections initiative coincides with broader legislative changes to federal student loan programs. According to reporting on Trump’s comprehensive budget legislation passed earlier this year, the bill repealed the Biden administration’s student loan forgiveness program and scaled back federal loan repayment benefits, resulting in an estimated $320 billion in savings over a decade.
As wage garnishment resumes after nearly 5 years, the Department of Education emphasized that it is working with federal student loan servicers and anticipates beginning processing applications for income-driven repayment plans soon. Defaulted borrowers are urged to contact the Default Resolution Group to make monthly payments, enroll in income-driven repayment plans, or sign up for loan rehabilitation to avoid wage garnishment.