Millions of borrowers in default could see paychecks and benefits reduced as collections resume
Wage garnishment is set to resume for thousands of student loan borrowers starting this week, as the federal government officially restarts involuntary collections after years of pandemic-era relief.
According to reports, the U.S. Department of Education has resumed withholding wages and certain federal benefits from borrowers who have defaulted on their federal student loans. The move marks a significant policy shift following extended payment pauses and administrative forbearance programs that were introduced during the COVID-19 pandemic.
What wage garnishment means for student loan borrowers
This collection process allows the federal government to recover unpaid student loan debt by deducting money directly from a borrower’s paycheck. Unlike private lenders, federal agencies are not required to obtain a court order before beginning collections once a loan enters default.
For many borrowers, this could mean a noticeable reduction in take-home pay at a time when inflation and everyday living costs remain high. In some cases, collections may extend beyond wages and affect tax refunds or certain federal benefits, adding additional financial strain.
Who is at risk starting this week?
Not all student loan borrowers are affected by the restart of collections. According to the Federal Student Aid (FSA) Office, only borrowers whose federal student loans are officially in default are subject to involuntary recovery efforts.
A student loan becomes delinquent the day after a missed payment. If payments remain unpaid for 270 consecutive days, the loan enters default status. Once this threshold is reached, the government may begin collecting the debt through paycheck deductions or other recovery methods.
More than 7 million borrowers enrolled in the Saving on a Valuable Education (SAVE) repayment plan have remained in administrative forbearance since June 2024. During that period, borrowers were not required to make monthly payments. However, interest on those loans resumed in August 2025, and officials later announced plans to restart enforcement for borrowers who remain behind.
How federal student loan collections work
Once collections begin, the federal government can withhold up to 15% of a borrower’s disposable income. In addition, officials may intercept 100% of a borrower’s federal tax refund and up to 25% of Social Security benefits, depending on the individual’s situation.
Many of these actions are carried out through the Treasury Offset Program, a centralized system used to recover debts owed to federal and state agencies. Borrowers must receive written notice at least 65 days before offsets begin, giving them time to review their options, dispute the debt, or request a hearing.
Borrowers in default will also receive communication from the Department of Education’s Default Resolution Group detailing how much they owe and outlining potential steps to resolve the issue.
What borrowers can do to avoid collections
Borrowers who act quickly may still have options to stop or reduce paycheck deductions. These options may include loan rehabilitation programs, enrolling in alternative repayment plans, or negotiating a repayment agreement based on income.
In some cases, collections may stop once a borrower enters a new repayment arrangement or successfully completes a rehabilitation program. Financial advisors often encourage borrowers to review their loan status promptly and respond to official notices to avoid prolonged financial consequences.
Why collections are resuming now
The restart of enforcement follows a proposed legal agreement announced in December 2025 to dismantle the SAVE plan. The decision effectively ends efforts launched under the Biden administration to forgive or reduce an estimated $200 billion in student loan debt affecting roughly 5 million borrowers.
The Trump administration has argued that enforcing repayment is necessary to restore accountability within the federal student loan system. As a result, millions of borrowers are now adjusting to the return of full-scale collections after several years of relief.
As enforcement resumes nationwide, borrowers are urged to stay informed, open all official correspondence, and explore available options to manage their debt before financial penalties increase.