Trump administration to begin wage garnishment for defaulted student loan borrowers in January

The Trump administration will begin garnishing wages of student loan borrowers who are in default starting in January, according to the U.S. Department of Education.

The department told CNN that the first notices will be sent to roughly 1,000 defaulted borrowers during the week of January 7, with the number of notices increasing each month. Wage garnishment applies to borrowers who have gone at least 270 days without making a payment on their federal student loans.

This process, known as administrative wage garnishment, allows the federal government to order non-federal employers to withhold a portion of an employee’s paycheck to repay defaulted loans. If the effort scales as expected, millions of borrowers could be impacted. As of April, the Education Department reported more than 5 million borrowers were already in default, with nearly 4 million more delinquent after missing payments for more than 90 days.

Earlier this year, the administration also restarted the Treasury Offset Program, which collects defaulted debts by withholding federal and state payments, including tax refunds and Social Security benefits.

Consumer advocates warn the move could add financial strain for borrowers already struggling with rising living costs. Critics argue the government should focus on expanding affordable repayment options rather than increasing collections.

In addition to wage garnishment, borrowers are facing other significant changes to the federal student loan system. A sweeping tax and spending package passed earlier this year placed new limits on how much graduate students and parents can borrow and eliminated certain deferment options. It also narrowed the range of available repayment plans.

The administration has also moved to end the SAVE repayment plan, which currently affects nearly 8 million borrowers. If approved by a federal court, borrowers would have a limited window to enroll in a new repayment plan.

Once a borrower is in default, deferment and forbearance options are no longer available, and repayment choices become limited. The Department of Education is urging affected borrowers to contact its Default Resolution Group for assistance. In cases of severe financial hardship, some borrowers may qualify to discharge student loans through bankruptcy if specific criteria are met.

Explore: NBCPalmSprings.com, where we are connecting the Valley.