The Trump administration is set to restart aggressive collection efforts against federal student loan borrowers who have defaulted on their payments, a significant policy shift that will see wage garnishments resume early next year. This move ends the leniency that was in place during the pandemic, which paused most enforcement actions for nearly four years.
Restart of Wage Garnishment Process
Federal officials have announced that formal notices will begin going out to borrowers in January 2024, signalling the restart of wage withholding and other recovery tools. The US Department of Education stated it will start sending notices to approximately 1,000 borrowers during the week of January 7, with this number increasing each subsequent month.
According to the department, borrowers must receive a minimum of 30 days’ notice before any wage garnishment can legally begin. A department spokesperson, in a statement quoted by the Associated Press, assured that collection activities would commence “only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans.” Borrowers enter default status once they are 270 days past due on their required payments.
End of Pandemic-Era Protections
Federal student loan payments were initially paused in March 2020 as a relief measure during the public health crisis. During this period, no loans—not even those already in default—were referred for collection. The payment pause officially ended earlier this year, paving the way for the Trump administration to resume enforcement.
In May, the administration had already begun collecting on defaulted student loans by withholding tax refunds and other federal payments. Although regular monthly payments for most borrowers restarted in October 2023, the preceding Biden administration had offered a one-year grace period that limited penalties for missed payments. That protection has now lapsed.
Criticism and Blocked Forgiveness Efforts
The decision to proceed with wage garnishment has drawn sharp criticism from borrower advocacy groups. Persis Yu, deputy executive director of the Student Borrower Protection Center, strongly condemned the move. In a statement issued by her organisation and quoted by the Associated Press, Yu said, “At a time when families across the country are struggling with stagnant wages and an affordability crisis, this administration’s decision to garnish wages from defaulted student loan borrowers is cruel, unnecessary, and irresponsible.”
This renewed crackdown comes in the wake of stalled broader relief efforts. The Biden administration had pursued several initiatives aimed at widespread student loan forgiveness, but these plans were halted after facing legal challenges in court. Consequently, borrowers who did not resume their payments now face the full force of renewed collection actions, including the imminent wage garnishments.
