Trump Administration Reinstates Wage Garnishment for Defaulted Student Loans
FOX Business’ Gerri Willis reports on a troubling new study revealing debt delinquencies are on the rise.
The Trump administration is preparing to resume wage garnishment for federal student loan borrowers who are in default, with notifications expected to start going out on Wednesday.
During the pandemic, student loan borrowers in default received a temporary reprieve from wage garnishment due to a pause on collections. However, that pause has ended, allowing the garnishment process to restart.
A spokesperson from the Department of Education informed FOX Business that “we expect the first notices to be sent to approximately 1,000 defaulted borrowers the week of January 7, and the notices will increase in scale on a month-to-month basis.”
Borrowers in default may face up to 15% of their after-tax wages being garnished, along with potential deductions from tax refunds and certain federal benefits. It’s important to note that a minimum weekly income is protected from garnishment. This process will continue until the defaulted loan is either fully paid or removed from default.
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Student loan borrowers in default may face wage garnishment as a pandemic-era pause on collections ends. (iStock)
Notices to borrowers in default must be sent 30 days prior to the commencement of wage garnishment. This allows borrowers the opportunity to repay their debts or contest the garnishment.
The notices also provide borrowers with the chance to enter into a voluntary repayment agreement and request a hearing to raise objections against the garnishment.
During a hearing, borrowers can contest the existence, amount, or enforceability of their debt. They may also argue that garnishing 15% of their disposable income would cause extreme financial hardship, or inquire whether garnishment is appropriate if they have been employed for less than 12 months following an involuntary job separation.
STUDENT LOAN DELINQUENCY RATES HIGHEST IN 21 YEARS AS COVID MORATORIUM FADES AWAY
The Department of Education, led by Secretary Linda McMahon, is sending out the first garnishment notices to defaulted borrowers this week. (Stefani Reynolds/Bloomberg via Getty Images)
Consumer advocates recommend that borrowers in default reach out to the federal government to avoid wage garnishment. They can request a hearing or enroll in loan rehabilitation or consolidation programs.
Borrowers are protected from being discharged from employment, denied employment, or subjected to disciplinary measures due to the garnishment. They also have the right to take legal action against an employer if such actions are taken against them due to the garnishment.
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President Trump’s administration is preparing to resume wage garnishment for defaulted student loan borrowers. (Andrew Harnik/Getty Images)
Moreover, borrowers have the right to limit the information shared with their employer regarding the garnishment, only providing what is necessary to comply with the withholding order.
Currently, over 5 million federal student loan borrowers are in default, and officials from the Trump administration caution that this number could increase significantly as repayment programs undergo revisions.
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Data from the Education Department indicates that as of June 2025, there were 5.3 million borrowers in default, representing 7% of the $1.58 trillion federal student loan portfolio.
FOX Business’ Gerri Willis reports on a troubling new study revealing debt delinquencies are on the rise.
The Trump administration is preparing to resume wage garnishment for federal student loan borrowers who are in default, with notifications expected to start going out on Wednesday.
During the pandemic, student loan borrowers in default received a temporary reprieve from wage garnishment due to a pause on collections. However, that pause has ended, allowing the garnishment process to restart.
A spokesperson from the Department of Education informed FOX Business that “we expect the first notices to be sent to approximately 1,000 defaulted borrowers the week of January 7, and the notices will increase in scale on a month-to-month basis.”
Borrowers in default may face up to 15% of their after-tax wages being garnished, along with potential deductions from tax refunds and certain federal benefits. It’s important to note that a minimum weekly income is protected from garnishment. This process will continue until the defaulted loan is either fully paid or removed from default.
TRUMP ADMINISTRATION SERVES A FINAL BLOW TO END BIDEN’S SAVE STUDENT LOAN PROGRAM
Student loan borrowers in default may face wage garnishment as a pandemic-era pause on collections ends. (iStock)
Notices to borrowers in default must be sent 30 days prior to the commencement of wage garnishment. This allows borrowers the opportunity to repay their debts or contest the garnishment.
The notices also provide borrowers with the chance to enter into a voluntary repayment agreement and request a hearing to raise objections against the garnishment.
During a hearing, borrowers can contest the existence, amount, or enforceability of their debt. They may also argue that garnishing 15% of their disposable income would cause extreme financial hardship, or inquire whether garnishment is appropriate if they have been employed for less than 12 months following an involuntary job separation.
STUDENT LOAN DELINQUENCY RATES HIGHEST IN 21 YEARS AS COVID MORATORIUM FADES AWAY
The Department of Education, led by Secretary Linda McMahon, is sending out the first garnishment notices to defaulted borrowers this week. (Stefani Reynolds/Bloomberg via Getty Images)
Consumer advocates recommend that borrowers in default reach out to the federal government to avoid wage garnishment. They can request a hearing or enroll in loan rehabilitation or consolidation programs.
Borrowers are protected from being discharged from employment, denied employment, or subjected to disciplinary measures due to the garnishment. They also have the right to take legal action against an employer if such actions are taken against them due to the garnishment.
TRUMP ADMINISTRATION AGREES TO SPEED UP STUDENT LOAN FORGIVENESS UNDER NEW COURT DEAL
President Trump’s administration is preparing to resume wage garnishment for defaulted student loan borrowers. (Andrew Harnik/Getty Images)
Moreover, borrowers have the right to limit the information shared with their employer regarding the garnishment, only providing what is necessary to comply with the withholding order.
Currently, over 5 million federal student loan borrowers are in default, and officials from the Trump administration caution that this number could increase significantly as repayment programs undergo revisions.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Data from the Education Department indicates that as of June 2025, there were 5.3 million borrowers in default, representing 7% of the $1.58 trillion federal student loan portfolio.
