Student loan borrowers who are in default could soon see money taken directly out of their paychecks, as the Trump administration moves to intensify federal loan collection efforts starting in January.
The Department of Education said Tuesday that wage garnishments will begin the week of Jan. 7. Around 1,000 defaulted borrowers will initially receive formal notices informing them that the government intends to begin withholding a portion of their wages. That number is expected to grow each month as enforcement expands.
According to an internal email from the department, the collection actions will only occur after borrowers have been given adequate notice and an opportunity to resume repayment. While the email did not specify how much would be withheld, federal student aid rules allow the government to garnish up to 15% of a borrower’s disposable pay — income remaining after legally required deductions. Borrowers are required to receive at least 30 days’ notice before wage garnishment begins.
This move builds on earlier enforcement steps taken this year, after the administration formally ended a five-year pause on student loan collections that began during the COVID-19 pandemic. Forced collections on defaulted federal loans resumed in May, allowing the government to withhold tax refunds and other federal payments to cover unpaid debt.
The pandemic-era relief originally suspended payments in March 2020. Although loan payments officially resumed in October 2023 following multiple extensions under the Biden administration, borrowers were not penalized for falling behind until last year. Today, roughly five million borrowers are already in default, and millions more are considered at risk of missing payments.
Officials had previously signaled that wage garnishment would return as part of the broader effort to restart collections. Being in default and subject to collections can significantly damage a borrower’s credit score, adding long-term financial consequences beyond the immediate loss of income.
Wage garnishment for student loans was common before the pandemic, said Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit that provides free guidance to borrowers. However, she noted that many borrowers have gone years without making payments or facing consequences, which could make the return of garnishment particularly jarring.
“There’s a lot of defaulted borrowers that think that there was a mistake made somewhere along the line, or the Department of Education forgot about them,” Mayotte said. “I think this is going to catch a lot of them off guard.”
Under federal rules, a loan becomes delinquent the day after a missed payment. After a set period — which varies depending on the type of loan — delinquency turns into default. Once a borrower defaults on a federal student loan, the entire remaining balance becomes due immediately, and the government or loan holder can begin collection actions, including garnishing wages.
Borrowers in default do still have options to regain good standing. Programs such as loan consolidation or rehabilitation can remove a loan from default, typically by requiring a series of consecutive payments based on the borrower’s income. However, those steps must be taken before collections, including wage garnishment, are already underway.