If you have a federal student loan that is in default, you may have a different paycheck come January. According to Forbes, there are over 5 million borrowers with defaulted student loans. A spokesperson for the U.S. Department of Education confirmed that the Trump Administration will be garnishing wages in early January 2026.
This is not the first time the U.S. government has garnished wages on student loan borrowers in default. However, there has been a long pause on government action due to forbearances since the COVID-19 pandemic.
What Is Wage Garnishment?
Wage garnishment is when your employer withholds part of your paycheck to repay a debt. It is a serious measure, subject to state and federal laws, and only used when there are no other options available. Typically, wage garnishment only occurs after a court hearing and order. An example is if a parent has not been paying child support and a court determines they owe child support, they will issue an order for wage garnishment.
However, with a government loan, such as federal student aid, the government does not have to go to court and has the administrative wage garnishment power to instruct your employer to garnish wages. The federal government must follow adequate notice and hearing procedures.
What Is Considered a Default?
Borrowers may be behind in student loan payments. However, once a loan is delinquent for 270 days (nine months) the loan is in “default.” Once the loan is in default status, the lender can commence legal action to collect the entire amount of the debt. Additionally, a defaulted loan will appear in your credit history.
The Forbearance Period
During the COVID-19 pandemic, the Department of Education instituted an “administrative forbearance” on March 13, 2020, pausing interest and monthly payments on student loans. This ended in October 2023.
Beginning January 7, 2026, the Department of Education will send 1,000 garnishment notices to defaulted borrowers, which will increase in the following months.
What To Know If You Are In Default
If you have a delinquent student loan, log on to StudentAid.gov to determine your loan status. If you are in default, the government has options for loan rehabilitation or loan consolidation.
- You should receive 30 days advance written notice and a chance to object or arrange for repayment options before the garnishment commences. If you have a repayment agreement, the government cannot garnish your wages unless you miss a payment.
- The Education Department can instruct your employer to withhold up to 15% of your disposable pay.
- By federal law, you should have a weekly take-home pay equal to 30 times the federal minimum wage. Therefore, if the minimum wage is currently $7.25 per hour, you should have weekly take-home pay of $217.50.
Because notices are set to come out in January, take steps now to avoid wage garnishment. Determine if your loan is in default and work with the Department of Education’s default resolution group for a repayment plan.
Related Resources:
- Consequences of Student Loan Default (FindLaw's Learn About the Law)
- What to Know Before Getting Student Loans (FindLaw Learn About the Law)
- FindLaw’s Guide to Student Loan Debt (FindLaw Mini Guide)
