The Trump administration will begin garnishing wages from federal student loan borrowers in default starting the week of January 7, 2026, the Education Department confirmed this week.
The Department of Education announced that approximately 1,000 borrowers currently in default will receive initial notifications about wage deductions beginning in January, with additional notices sent to larger groups in the following months.
This marks a significant expansion of collection efforts that resumed in May 2025 after a five-year pause during the COVID-19 pandemic. The phased approach allows the department to manage the administrative workload while processing cases systematically.
Defaulted Student Loans
Under federal law, the government can withhold up to 15 percent of a borrower's disposable income, wages minus legally required deductions such as taxes and Social Security contributions. The garnishment continues until the loan is paid in full or removed from default status, according to the Washington Post.
Borrowers are entitled to receive notice at least 30 days before garnishment begins and can request a hearing if the garnishment would cause financial hardship. The federal government is required to verify a borrower's current address and employment information before issuing garnishment orders.
The timing comes as over 5 million borrowers currently have federal student loans in default, meaning they have missed payments for at least 270 days, according to the Department of Education.
An additional 4 million borrowers face the risk of defaulting in the coming months, the Student Loan Borrower's Assistance reported. Default rates have risen steadily since collections resumed, particularly among borrowers struggling with inflation and increased living costs.
Borrowers have several options to avoid wage garnishment. These include enrolling in income-driven repayment plans, which cap monthly payments based on earnings, negotiating a payment arrangement with the Education Department, or pursuing loan rehabilitation programs that can remove default status after successful payments.
Start of Wage Garnishment
Some options are scaled for low-income borrowers to prevent excessive financial burden. However, experts emphasize that borrowers must act quickly, as ignoring collection notices can accelerate enforcement action, as per SHRM.
Employers will be required to comply with garnishment orders immediately upon receipt, with no grace period allowed. Human resources and payroll departments must withhold the specified amount and send it to the designated agency.
Federal law prohibits employers from taking negative employment actions, such as termination or demotion, solely because an employee's wages are being garnished.
For borrowers concerned about their student loan status, financial counselors recommend contacting their loan servicer or the Default Resolution Group to discuss repayment options before garnishment orders arrive. The Education Department's website also provides resources for understanding individual rights during the collection process.
