UPDATE: The Trump administration has just announced that it will begin garnishing wages of student loan borrowers in default starting in January 2024. The U.S. Education Department confirmed that the first notifications will be sent to approximately 1,000 borrowers during the first full week of January, with more notices expected to follow each month.
This decision marks a significant shift in the administration’s approach to handling defaulted student loans. Borrowers may see up to 15% of their disposable income withheld directly from their paychecks as early as 30 days after receiving notice. The Education Department emphasized that no collections will occur without prior notification, allowing borrowers a chance to repay their debts before garnishment begins.
Critics are already voicing their concerns. Persis Yu, deputy executive director and managing counsel for the advocacy group Protect Borrowers, labeled the decision “cruel, unnecessary, and irresponsible.” In a statement released Tuesday, Yu highlighted that many borrowers are already struggling, stating, “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.”
Wage garnishment for defaulted loans had been paused during the COVID-19 pandemic, but collections resumed in May. Federal Student Aid, an office of the Education Department, outlines that borrowers will receive a notice detailing the garnishment plan, including the nature and amount of their debt, their right to review related records, and options to contest the garnishment or negotiate repayment.
As this situation develops, borrowers should stay informed about their rights and potential impacts on their finances. The Education Department’s decision underscores an urgent need for borrowers to address their defaulted loans proactively to avoid severe financial consequences.
Expect to see more updates as the timeline approaches. If you or someone you know is affected, now is the time to act. Share this important information to keep others informed about their options before wage garnishment begins.
