In a significant development that could impact many Americans, the U.S. Department of Education is set to resume wage garnishment for borrowers who have defaulted on student loans, starting January 7. This decision comes at a time when financial burdens are escalating for countless families, raising concerns about the implications for those already struggling. As economic pressures mount amidst rising prices and employment fluctuations, this policy may further complicate the lives of many borrowers.
The administration of United States President Donald Trump has announced that it will initiate wage garnishment for borrowers who have defaulted on their student loans, marking a notable shift since the federal government halted such actions at the outset of the COVID-19 pandemic. Notices will begin going out on January 7, 2026, according to a spokesperson from the Department of Education.
The garnishment policy will initially affect approximately 1,000 borrowers, with the number expected to grow in subsequent months. The Department has indicated that the notices will scale up incrementally, though they have not provided details on how specific borrowers were selected for this first group or how many more may ultimately be impacted.
Under federal law, the government is permitted to garnish up to 15% of a borrower’s disposable income, as long as individuals retain a minimum weekly amount equivalent to 30 times the federal minimum wage, currently set at .25 an hour—unchanged since July 2009. With around one in six American adults carrying student loan debt, totaling approximately .6 trillion, the urgency of addressing this issue is pronounced. As of April 2025, more than five million borrowers had not made a payment in over a year, according to the Education Department’s findings.
The decision to reinstate garnishments comes alongside rising economic challenges for American families, as inflation strains household budgets and a slowing job market creates uncertainty. Challenger, Gray & Christmas, a consulting firm, reported that over 1.1 million individuals lost their jobs in 2025 amid these trends, which have contributed to an unemployment rate increase to 4.6%—the highest level since 2021, according to the Department of Labor.
Critics of the garnishment policy are voicing their concerns about the implications for affected families. Julie Margetta Morgan, a former deputy undersecretary at the Education Department under the Biden administration, emphasized that many families are facing dire choices between meeting basic needs and managing loan repayments. She asserted that instead of addressing the underlying affordability crisis, this approach pushes families further into financial distress.
In addition to wages, the federal government retains the authority to garnish various forms of income, including tax refunds and certain benefits. As the landscape of student debt continues to evolve, this policy marks a critical juncture for borrowers navigating an already complicated financial environment.
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