In a move that’s sparking widespread debate amid economic pressures, the Trump administration has announced it will restart garnishing wages from student loan borrowers in default starting early January 2026.
This ends a long-standing pause on such collections that began during the COVID-19 pandemic, potentially affecting millions of Americans struggling with over $1.6 trillion in national student debt.
Background: From Pandemic Relief to Resumed Collections
The wage garnishment freeze was part of broader student loan relief measures implemented in March 2020 under the CARES Act, halting collections on defaulted federal loans to ease financial burdens during the crisis. In May 2025, the Trump administration began phasing out the overall payment pause, signaling a return to pre-pandemic enforcement.
Now, the U.S. Department of Education confirms that administrative wage garnishment—where up to 15% of disposable pay can be seized without a court order—will resume for borrowers who’ve been in default (typically after 270 days of non-payment).
This policy shift comes as student loan defaults remain high, with about 7-8 million borrowers in severe delinquency.
Critics argue it’s poorly timed, with inflation and job market uncertainties still lingering, while supporters view it as necessary fiscal responsibility.
Who Will Be Impacted and How?
- Affected Borrowers: Primarily those with federal direct loans or FFEL loans in default. Private loans aren’t covered, but federal ones make up the bulk.
- Garnishment Mechanics: Employers will be notified to withhold pay, potentially reducing take-home income by 15% or more. Social Security, tax refunds, and other benefits could also be targeted in extreme cases.
- Scale: Estimates suggest millions could face immediate hits to their paychecks, exacerbating financial stress for low-income workers, recent graduates, and those in gig economies.
The Department of Education has urged borrowers to check their status via the Federal Student Aid website and explore rehabilitation options to exit default before January.
Reactions Pour In: Outrage and Defenses
Borrower advocacy groups like the Student Borrower Protection Center have slammed the decision as “cruel, unnecessary, and irresponsible,” especially during the holiday season.
Social media is ablaze with stories from affected individuals, with hashtags like #StudentLoanCrisis trending as users share fears of eviction or inability to afford basics.On the other side, Trump administration officials defend the move as a step toward accountability, arguing that prolonged pauses encourage non-payment and burden taxpayers. Education Secretary appointees have echoed this, emphasizing that relief programs like income-driven repayment remain available for proactive borrowers.
What Borrowers Can Do to Avoid GarnishmentIf you’re at risk:
- Rehabilitate Your Loan: Make nine affordable payments over 10 months to remove default status.
- Consolidate: Combine loans into a new one to reset the clock.
- Seek Hardship Options: Contact your servicer for deferment or forbearance.
- Legal Aid: Organizations like the National Consumer Law Center offer free guidance.
Experts recommend acting fast—garnishment notices could arrive as early as mid-January.
This development underscores the ongoing student debt debate in America, with calls for broader forgiveness clashing against fiscal conservatism. As the new year approaches, all eyes are on how this policy unfolds amid potential legal challenges.
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