The Trump Administration will commence garnishing the wages of borrowers in default on their student loans from January, with an estimated 1,000 individuals expected to receive notices during the first week of the new year. This move marks a significant shift, as it will be the first time since the onset of the COVID-19 pandemic in 2020 that borrowers' paycheques are at risk of involuntary withholding, following a period during which collection efforts were paused.
The notices of administrative wage garnishment will gradually increase in number, reflecting a renewed focus on recovering federal student debt. The decision comes after the government resumed its efforts to collect on defaulted federal student loans—typically triggered after 270 days of non-repayment. The US government possesses extensive collection powers over federal debts, including the ability to seize tax refunds, wages, and even Social Security and disability benefits if necessary.
