Washington, D.C. – The Trump Administration gave student loan borrowers a Christmas warning by announcing federal student loan borrowers in default on their loans will be subject to possible garnishment of their wages in early 2026.
More than 5 Million borrowers are considered in default, meaning they are 270 days past due on their payments. The Department of Education said it will send out approximately 1,000 notices to borrowers starting the week of January 7, 2026, with more notices to come at an increasing scale each month. The Department predicted another 4 million could be in default in the coming months, which would mean nearly 25% of all student loan borrowers would be in default.
The Department said they will begin collection activities through the Treasury Department’s offset program, “only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans.”
The Department must give borrowers 30 days notice before their wages can be garnished.
In May, 2025, the Trump Administration ended the pandemic-era pause on student loan payments and began to collect on defaulted debt by withholding tax refunds and other federal payments to borrowers. The move ended a period of leniency for student loan borrowers. Since March 2020, no federal student loans had been referred for collection, including those in default, until the Trump Administration’s changes to policy earlier in 2025.
The Biden Administration had tried on multiple occasions to give broad forgiveness to tens of millions of student loans during Biden’s term, but those efforts were eventually stopped by the courts, including a 2023 ruling by the Supreme Court.
Still, the Biden Administration was able to wipe out student loan debt for 5 million borrowers through other forgiveness programs.
“At a time when families across the country are struggling with stagnant wages and an affordability crisis, this administration’s decision to garnish wages from defaulted student loan borrowers is cruel, unnecessary, and irresponsible,” said Persis Yu, Deputy Executive Director for the Student Borrower Protection Center.
Mr. Yu accused the Department of failing to sufficiently help borrowers find affordable payment options.
“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,” Mr. Yu said in a statement.
Education Secretary Linda McMahon has issued the following statement:
“Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means borrowers return to payment – both for the sake of their own financial health and our nation’s economic outlook…There will not be any mass loan forgiveness.”
The “Big Beautiful Bill” signed into law on July 4, 2025, overhauled the federal student loan system, phasing out several repayment plans, including the SAVE, PAYE, IBR, and ICR, capping the amount individuals can borrow for higher education, and eliminating deferment provisions for borrowers facing economic hardship.
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