[UNITED STATES] Following the Trump administration’s decision to reinstate collections on defaulted federal student loans, the U.S. Department of Education has released new information outlining the timeline for wage garnishments and other involuntary repayment measures.
The return to active collection efforts comes as national debate continues over the equity of student loan policies—particularly their impact on low-income borrowers and attendees of for-profit institutions. Advocacy organizations have long argued that the federal student loan system places a disproportionate burden on vulnerable populations, including older Americans and communities of color, who are statistically more likely to default. While the Biden administration previously sought to mitigate these disparities through targeted debt relief, court battles and policy shifts have left many borrowers uncertain about their financial futures.
Here's what borrowers need to know.
Why Are Wage Garnishments Returning?
Since the onset of the COVID-19 pandemic in March 2020, most federal student loan collections were suspended. The Biden administration extended those pauses to assist financially struggling borrowers during the public health emergency and help them get back on track.
However, the pause was never meant to be permanent. The Trump administration’s move to resume garnishments marks a broader effort to reestablish repayment enforcement. Critics warn that the policy change overlooks the continued financial hardships many borrowers face—especially amid inflation and rising costs of living. Supporters argue that enforcing loan repayments upholds fiscal responsibility and ensures taxpayers aren’t left to foot the bill.
“Borrowers should pay back the debts they take on,” U.S. Secretary of Education Linda McMahon said in a video posted on X on April 22. Consumer advocates maintain that borrowers have been navigating a confusing and inconsistent loan system, citing misleading information, unfair charges, and shifting rules.
“People who default on loans typically truly cannot afford to pay them,” said James Kvaal, former U.S. undersecretary of education under President Biden, in a previous interview.
How Much of My Wages Can Be Garnished?
The Department of Education is legally permitted to garnish up to 15% of a borrower’s disposable income—earnings left after taxes—according to higher education expert Mark Kantrowitz.
However, federal law requires that garnished borrowers retain at least 30 times the federal minimum wage ($7.25/hour), or $217.50 per week.
Some states offer additional consumer protections. While these generally don’t apply to federal student loans, borrowers in places like Texas, North Carolina, and Pennsylvania—where wage garnishment for private debt is prohibited—may still wish to review local laws for other potential safeguards.
When Will Garnishments Begin?
According to a recent Education Department press release, the Treasury Department plans to notify 5.3 million borrowers in default about upcoming collection efforts "later this summer."
As early as June, the federal government may also begin withholding portions of certain federal benefits—including Social Security payments—from borrowers in default. By law, Social Security recipients must still receive a minimum monthly payment of $750 after garnishment, which can total up to 15% of their benefit.
What About Gig Workers or the Self-Employed?
Borrowers who earn 1099 income may be less vulnerable to traditional wage garnishment, since the government cannot directly deduct earnings without an employer.
“If there is no employer, wage garnishment can’t happen,” Kantrowitz said. However, these borrowers are still subject to other collection methods, such as tax refund seizures or liens. If payments are processed through third parties, like staffing firms or gig platforms, garnishment may still occur under certain conditions.
Can Borrowers Contest Garnishment?
Yes. Defaulted borrowers are entitled to a 30-day advance notice before wage garnishment begins, according to the Education Department.
During this window, borrowers can request a hearing before an administrative law judge to challenge the garnishment, Kantrowitz said. The notice will include instructions for initiating this process. Grounds for appeal may include recent unemployment, recent bankruptcy, or financial hardship that garnishment would exacerbate.
Do I Have to Tell My Employer?
Employers typically have experience handling wage garnishments stemming from child support, tax issues, and other obligations. Kantrowitz emphasized that an employee cannot be legally fired due to a garnishment order related to student loans.
How Can I Get Out of Default?
Borrowers can contact the Department of Education’s Default Resolution Group to explore options for becoming current on their loans. These may include enrolling in income-driven repayment (IDR) plans or participating in loan rehabilitation programs.
Some may qualify for deferment or forbearance, which offer temporary payment relief. Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York, advised borrowers to request retroactive forbearance for missed payments and a temporary forbearance while transitioning into an IDR plan.
Loan consolidation is another potential solution to simplify repayment, although it does not reduce the total debt owed. Experts also point to the Fresh Start initiative, which temporarily clears defaulted loans from credit reports and restores borrower access to income-driven repayment plans and other benefits.
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