Wage Garnishment Returns for Student Loan Defaulters

Starting in early 2026, the U.S. Education Department plans to resume taking money directly from the paychecks of people who haven't paid their student loans in over 9 months. This practice, called wage garnishment, was put on hold during the pandemic. The department says they will begin by sending notices to about 1,000 people in January, with more notices going out each month after that.

What Happens When You're in Default?

When someone hasn't made a loan payment in over 270 days, they are considered in default. At this point, the government can take steps to collect the debt, including taking a portion of the person's paycheck. Before this happens, borrowers should get a 30-day notice from the Education Department.

Experts Warn of Financial Strain

Experts are worried about the timing of this change. Betsy Mayotte, who runs a student loan advice group, points out that 2026 will also see increases in health insurance costs for many people. This double hit could make life much harder for those already struggling with debt.

Millions of Borrowers at Risk

Right now, about 5.5 million people are in default on their student loans. Another 3.7 million are more than 270 days behind on payments, and 2.7 million are just starting to fall behind. In total, around 12 million people are having trouble keeping up with their student loan payments. That's more than 1 in 4 federal student loan borrowers.

Government's Collection Tools

The government has tools to collect on these debts, including taking tax refunds and Social Security benefits. But wage garnishment is one of the most direct ways they can recoup the money. For borrowers, this means a bigger chunk of their paycheck will go toward old debts, leaving less for other expenses.

Critics Argue Against the Approach

Critics argue that this approach punishes people who are already struggling. With the cost of living going up and wages not keeping pace, many borrowers are finding it harder to make ends meet. Adding wage garnishment to the mix could make things even tougher.