As if student loan borrowers didn’t have enough to worry about, some who fell into default during the pandemic-era payment pause are now seeing a long-dreaded consequence hit their paychecks: Federal wage garnishment has officially restarted for the first time in roughly five years. The move could affect millions of Americans already struggling with higher prices, stagnant wages, and the weak job market for college grads.
Student loan borrowers in default are at risk of having up to 15% of their wages garnished, the Education Department announced last year, although it didn’t initially give an exact date when those collections would begin. But the time has come.
Wage garnishment “is a scary concept since they can take 15% of after-tax income,” Ashley Morgan, debt and bankruptcy attorney and owner of Ashley F. Morgan Law PC, told Fortune. Morgan has worked with thousands of clients to resolve debt and credit issues.
What’s happening now
- The Trump administration’s Education Department has begun sending garnishment notices to defaulted federal student loan borrowers, with the first wave going out this week.
- Officials say the action follows the end of the pandemic collections pause and will ramp up this year as more defaulted accounts are moved into enforced collections.
- This marks the next stage of the post-pandemic student loan reset, following the resumption of payments in late 2023 and the gradual restart of tax refund seizures and other offsets in 2025.
Who is impacted—and how many
Federal wage garnishment applies to borrowers with federal student loans in default, meaning they have gone at least 270 days without a required payment. “So you are not at risk for garnishment if you are just a few months behind and not in actual default,” Morgan said.
- Roughly 5.3 million borrowers are in default and are expected to receive garnishment-related notices as collections scale up.
- Earlier Education Department estimates suggested about 2 million borrowers were at immediate risk in the first waves, with several million more likely as delinquencies roll into default.
- Private student loans follow different rules and typically require a court judgment before wages can be garnished.
How wage garnishment works
For federal student loans, the government can order employers to withhold part of a worker’s paycheck without going to court—a process known as administrative wage garnishment.
- The Education Department (or its collection contractors) can generally garnish up to 15% of a borrower’s disposable pay for defaulted federal loans.
- By law, garnishment must still leave at least 30 times the federal minimum wage ($7.25) per week. That makes it $217.50 right now.
- Borrowers are entitled to at least 30 days’ written notice before garnishment begins, and they can request a hearing to challenge the amount or claim financial hardship.
Why this matters for borrowers
A 15% haircut to take-home pay can quickly destabilize households already on the edge, especially as housing, food, and childcare costs remain elevated due to inflation and tariffs. Default and garnishment can also push credit scores lower, making it harder and more expensive to borrow for cars or homes, and even to pass some employer background checks.
Experts warn older borrowers—especially those on fixed incomes—are vulnerable when wage and benefit seizures stack on top of other debts and medical costs. In fact, AARP calls student loan collections the “unheralded burden” for older Americans.
What student loan borrowers should know
Even if wage garnishment has already started, borrowers still have options to reduce or stop it over time.
- Open every notice: Ignoring mail or email from servicers or the Education Department can cost you valuable appeal rights and deadlines.
- Ask about rehabilitation or consolidation: Entering a loan rehabilitation agreement or consolidating defaulted loans into a new federal Direct Loan can eventually remove the default and end garnishment, though terms differ.
- Explore income-driven repayment (IDR): Once out of default, enrolling in an IDR plan can cap payments at a percentage of income and help prevent falling back into default.
- Document hardship: Borrowers can request a hearing to argue garnishment causes undue financial hardship or that the amount is miscalculated.
“If a collection notice arrives, it’s critical to respond immediately,” Broc Sleek, senior vice president of lending operations at LendKey, told Fortune. “If wage garnishment would create a major hardship, those borrowers should consider requesting a hearing.”
For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.
