The U.S. Department of Education is resuming wage garnishment for borrowers in default on their federal student loans, marking the end of pandemic-era relief measures. Starting January 7, 2026, wage deductions will begin for those who have not made payments on their loans for months, signaling a shift back to pre-pandemic debt collection practices.
The decision comes after a lengthy pause in collections that began during the COVID-19 pandemic. The federal government had suspended efforts to recover student loan debt, including garnishing wages, tax refunds, and other federal benefits. Now, as millions of borrowers struggle to get back on track after the pause, the government is stepping up its efforts to reclaim billions in overdue loans.
Return to Pre-Pandemic Collection Practices
Since March 2020, federal student loan borrowers have been given relief in the form of payment suspensions and halted collections. During this period, borrowers were not required to make payments, and the government temporarily stopped using aggressive methods to collect on defaulted loans, such as wage garnishments. The pandemic relief program, extended several times by both the Trump and Biden administrations, has now come to an end, and loan collections are resuming.
According to a report by The Washington Post, the first group of approximately 1,000 borrowers will receive notices in early January, informing them that wage garnishments may soon begin. The department plans to gradually expand these notifications over the coming months, targeting larger groups of borrowers.
A borrower is considered in default after missing payments for at least 270 days (roughly nine months), at which point the government can demand the full balance of the loan immediately. Wage garnishment, which can seize up to 15% of a borrower’s after-tax income, will continue until the loan is either repaid or the borrower has taken steps to bring the loan out of default.
Consequences of Default for Borrowers
The impact of default on federal student loans extends beyond wage garnishment. Once a borrower defaults, the entire loan balance becomes due, and the government can use additional collection methods, such as intercepting federal payments, including tax refunds and Social Security benefits, through the Treasury Offset Program.
Moreover, defaulting on a loan can significantly damage a borrower’s credit score. Late or missed payments are reported to credit bureaus, and the negative mark can remain on a borrower’s credit report for up to seven years, complicating future financial endeavors such as securing loans or credit cards.
Adem Selita, co-founder of The Debt Relief Company, emphasized the seriousness of ignoring federal student loans. “The consequences of not paying student loans back can be quite severe. The Department of Education is not a creditor you want coming after you! They have a lot of avenues for repayment. ” Selita said, according to Newsweek. The threat of wage garnishment and other collection methods is a significant financial strain for those already struggling to pay their debts.
While wage garnishment and other collections are legal and outlined in the Higher Education Act, borrowers are given a 30-day notice before garnishments begin. During this period, they can request a hearing, pay off their loans in full, or negotiate a repayment plan to avoid garnishment. This temporary window allows borrowers some flexibility in addressing their debts before more severe financial consequences take effect.
The resumption of wage garnishment for student loan borrowers in default marks a pivotal moment as the government returns to more aggressive collection practices. For many, the return to repayment is an unwelcome financial burden, particularly after several years of relief. As the Department of Education begins to process these collections, millions of borrowers face the prospect of wage garnishment, tax refund interceptions, and long-term credit damage unless they take steps to resolve their defaulted loans.
