In 2026, wages of student loan borrowers in default may be garnished

Starting January 2026, the U.S. Department of Education will resume collecting federal student loans from borrowers in default, including possible wage garnishment, raising concerns about financial strain for millions already struggling with repayment.

In January 2026, the U.S. Department of Education is set to restart the collection of federal student loan payments from borrowers who are in default. This resumption of debt collection, a move originally announced under the Trump administration's policies, has raised concerns among borrower advocacy groups. The garnishment of wages is one potential consequence for those who are unable to meet their payment obligations.

What to Expect from Wage Garnishment

As the new year begins, affected borrowers will receive advance warnings in the first week of January 2026. These notices will provide ample time for borrowers to address their defaulted loans before any garnishment action is taken. Borrowers will have clear communication regarding the garnishment process, which will provide them with time to make necessary arrangements to meet their financial obligations.

While specific wage garnishment percentages have yet to be disclosed, the U.S. government is moving ahead with this policy despite criticism. Advocacy groups, such as Protect Borrowers, have expressed outrage over this decision, arguing that the government should focus on creating affordable repayment plans rather than seizing wages from individuals already struggling with student debt. Persis Yu, a representative from Protect Borrowers, condemned this policy as an example of a lack of empathy and poor judgment, particularly given that millions of borrowers are already close to default.

Understanding Defaulted Student Loans

A federal student loan is considered to be in default after 270 days of missed payments. Borrowers who have defaulted will be given at least 30 days' notice before garnishment procedures begin. The financial relief many borrowers experienced during the pandemic, when interest on federal student loans was suspended, is now over. With the suspension lifted in October, the U.S. government has resumed efforts to collect student loan payments.

The Scope of the Problem

As of May 2025, over 5 million federal student loan borrowers were already in default. The Department of Education anticipates that an additional 4 million borrowers could default in the coming months. This means that nearly a quarter of all student loan borrowers in the United States may be affected by the default process.

The Biden administration's debt cancellation plans, which offered some relief to borrowers, have faced multiple legal challenges, and a definitive ruling from the U.S. Supreme Court has halted these efforts. Despite this, the administration's approach to student loan relief has helped over 5 million borrowers in some capacity. According to Education Secretary Linda McMahon, the Department of Education, in collaboration with the Department of Treasury, will continue to manage the student loan program responsibly to protect both the financial health of borrowers and the broader economic outlook of the nation.

The Biden administration has made it clear that no mass loan forgiveness will be provided. Instead, they are focusing on helping borrowers return to repayment, even as the structure of student loan programs changes. Existing repayment plans such as SAVE, PAYE, IBR, and ICR are being replaced by newer approaches designed to hold borrowers accountable for repaying their loans. These changes signal a shift toward more stringent enforcement of repayment obligations, which will likely lead to fewer opportunities for struggling borrowers to access relief.

The Impact on Borrowers

The shift in the student loan landscape, alongside the potential for wage garnishment, has left many borrowers with fewer options for financial relief. The elimination of pandemic-era protections and the growing pressure to repay loans could lead to greater financial stress for many individuals. As financial expert Angela Rivera notes, while garnishment can recover funds for the government, it may exacerbate financial difficulties for borrowers who are already under strain. This highlights the need for more flexible repayment options that balance enforcement with support for those facing financial hardship.

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• Student loan borrowers in default could see wages garnished in 2026