Student loan borrowers could face wage garnishment
Millions of Americans who are behind on their federal student loans could soon have their paychecks garnished as the U.S. Department of Education moves to resume aggressive collections.
Fox – 5 Atlanta
The federal government has officially resumed garnishing wages and withholding benefits for student loan borrowers after years of legal impasse.
The Trump administration has taken several steps to limit repayment options and force collections in response to the long COVID-19-era suspension. The federal Department of Education announced a proposed legal agreement that would eliminate the Savings for Worthy Education (SAVE) plan in December 2025, dealing a decisive blow to the Biden administration’s efforts to forgive or reduce the $200 billion in repayment burdens for 5 million federal debtors.
According to reports, more than 7 million SAVE borrowers have been placed under administrative moratorium with no payments required since June 2024. Interest on their debts will resume in August 2025, and the government has announced plans to resume wage garnishments for borrowers who are in arrears from January 7th.
Here’s what you need to know about people at risk of having money taken from their paychecks.
USA TODAY has reached out to the Department of Education for comment.
What happens if I fall behind on my student loan payments?
Missing a payment or two on your federal student loans doesn’t automatically put you in a bad position. According to the Department of Education’s Federal Student Aid Administration (FSA), your loan becomes delinquent the day after you miss a payment, which typically results in late fees and potential damage to your credit score.
If you go too long without making payments, you can default on your loan, at which point the government begins involuntary collections, automatically removing money from your paycheck, tax refund, or other federal benefits.
What is wage garnishment?
Wage garnishment is a legal process in which money is seized from an employee’s paycheck to pay off a debt. This money is collected by the employer and sent to the relevant creditors, usually after a court order or other legal notice.
Common reasons for payroll garnishment include child support, student loan debt, credit card debt, bankruptcy, and unpaid taxes, says payroll processing company ADP. Employers can be subject to large fines and legal penalties if they fail to garnish an employee’s wages.
The amount you can withhold from your paycheck depends on the type of debt and state and federal law. The garnishment stops when the debt is paid, the garnishment order is revoked, or the period specified in the order ends.
What is the Treasury Offset Program? What can it collect from you?
The Financial Offset Program is a central government program to collect debts owed to federal and state agencies, such as child support and defaulted loans.
The term “financial offset” used by the FSA office refers to the government’s ability to withhold tax refunds and other federal benefits, such as Social Security checks, as a form of repayment.
Who is at risk of involuntary collection on student loans?
Only those who are delinquent on their student loans are at risk for paycheck garnishment and other withholdings.
Federal student loans must be missed for 270 days to be considered delinquent. The FSA office said they then received a letter from the Department of Education’s Default Resolution Group (DRG) stating the amount they owed and steps they could take to resolve the default, including applying for relief, reducing monthly payments, or requesting a hearing.
If you don’t pay or take steps to resolve the problem for more than 360 days, the government can begin repaying your debt through wage garnishment or other means without a court order. If you plan to use a Treasury offset to collect your funds, you will receive notice by mail from the U.S. Treasury at least 65 days before withholding begins.
For federal student loans, the government can garnish up to 15% of your paycheck, 100% of your tax refund, and up to 25% of your Social Security benefits.
