The Trump administration is set to begin garnishing wages of student loan borrowers who have fallen into default starting in early January, a U.S. Department of Education spokesperson told CNBC on Tuesday.
This marks the first time since the onset of the Covid-19 pandemic that borrowers’ paychecks could be impacted, after federal authorities paused all collection activity during the crisis.
Beginning the week of Jan. 7, the Education Department plans to send administrative wage garnishment notices to roughly 1,000 borrowers who are in default, according to the spokesperson. Officials said the number of borrowers receiving such notices will rise in the weeks that follow.
READ: Almost 10 million US students are behind on their student loan payments (March 27, 2025)
The federal government also wields broad authority to collect on unpaid student loans, allowing it to intercept tax refunds, garnish wages, and even withhold portions of Social Security retirement and disability benefits.
Under current rules, the Education Department can take as much as 15% of a borrower’s after-tax earnings to recover student loan debt. However, the law requires that borrowers retain a minimum level of income — at least 30 times the federal minimum hourly wage of $7.25 per week, or $217.50 — according to higher education expert Mark Kantrowitz.
Student loan borrowers are already facing mounting strain amid a softer job market, repeated shifts in the lending system, and recent difficulties accessing relief programs. The Education Department has previously said that more than five million borrowers are currently in default, a figure that could climb to nearly 10 million in the near future if current trends continue.
More than 42 million Americans are carrying student loan debt, which collectively tops $1.6 trillion.
Consumer advocates say borrowers hoping to avoid wage garnishment should reach out to the government’s Default Resolution Group and explore options to bring their accounts back into good standing, including enrolling in a loan rehabilitation program.