The U.S. Department of Education has confirmed that administrative wage garnishment for borrowers who have defaulted on their student loans will resume during the week beginning January 7, marking the first time collections have restarted since they were suspended at the onset of the COVID-19 pandemic.
According to CNBC, the department will initially send notices to approximately 1,000 borrowers, with the number expected to increase gradually over the coming months.
Federal Powers and Rising Pressure on Student Loan Borrowers
The federal government has broad authority to collect outstanding debts, including garnishing a portion of wages, seizing federal tax refunds, and withholding payments from retirement or disability benefits. Under the law, the Department of Education is permitted to garnish up to 15% of a borrower’s disposable income after taxes, while ensuring a minimum weekly income of $217.50. This amount equals 30 times the federal minimum hourly wage of $7.25, according to higher education expert Mark Kantrowitz.
The decision comes at a time when borrowers are facing mounting financial pressure due to a weakening labor market and difficulties accessing relief programs. The Department of Education previously indicated that more than 5 million borrowers are currently in default, with projections suggesting the number could soon rise to nearly 10 million. Total student loan debt in the United States now exceeds $1.6 trillion and is held by more than 42 million Americans.
Consumer rights advocates are urging borrowers to contact government default resolution teams to avoid wage garnishment. Available options include loan rehabilitation programs and revised income-based repayment plans.