The Trump administration is reigniting tensions with its decision to resume wage garnishments on defaulted student loans, affecting millions of Americans.
Story Overview
- The Trump administration has started notifying student loan borrowers in default about imminent wage garnishments.
- This marks the first direct wage garnishment since the pandemic pause in 2020, targeting 5.3 million defaulted loans.
- The move aims to recover funds from a $1.58 trillion portfolio, as the administration ends leniency.
- Borrowers have a 30-day window to resolve debts before garnishments of up to 15% of disposable income begin.
Resumption of Wage Garnishments
In a significant policy shift, the Trump administration’s Department of Education began sending notices to approximately 1,000 defaulted federal student loan borrowers during the week of January 7, 2026. This action is set to scale up monthly, ultimately affecting millions of borrowers who have been in default for over 270 days.
The resumption of wage garnishments comes after a pause that began in March 2020 during the COVID-19 pandemic, which halted collections and wage garnishments.
The administration’s decision is part of a broader strategy to reinforce fiscal responsibility and government accountability. With approximately 5.3 million borrowers in default as of June 2025, this policy aims to recover funds from the $1.58 trillion federal student loan portfolio.
Borrowers targeted by these notices have a 30-day period to either resolve their debts or face wage garnishments of up to 15% of their disposable income.
JUST IN: The Department of Education says the Trump administration will start garnishing the wages of student loan borrowers in default starting this week.
Carley Shimkus: “The department says they expect around 1,000 defaulted student loan borrowers to receive notices. The… pic.twitter.com/WhbgHSMjrC
— RedWave Press (@RedWave_Press) January 7, 2026
Impact on Borrowers and Economy
For the 5.3 million borrowers in default, this policy could result in significant financial strain. The garnishments, which protect a minimum income threshold of $217.50 per week, may lead to reduced disposable income for many low-wage earners.
This financial burden comes at a time when economic recovery is still underway, potentially exacerbating hardships for those already struggling to make ends meet.
The long-term economic implications could be substantial, with projections indicating that defaults could reach 13 million by the end of 2026 due to affordability crises and disruptions in repayment plans.
While this move aligns with conservative values of fiscal accountability, it also raises concerns about its impact on economic growth and social stability, particularly among younger generations facing stagnant wages.
Reactions and Stakeholders
Various stakeholders have expressed differing opinions on this policy. The Student Borrower Protection Center has criticized the decision as “cruel, unnecessary, and irresponsible,” advocating for more affordable repayment plans over aggressive collections.
Meanwhile, consumer advocates emphasize the rights of borrowers to request hearings for hardship or debt disputes, although their influence remains limited compared to the Department of Education’s authority.
This policy shift highlights the ongoing tension between recovering government funds and protecting borrower rights, with the Trump administration prioritizing fiscal recovery over leniency.
As the situation develops, the impact on both individual borrowers and the broader economy will become clearer, influencing future policy decisions and public sentiment.
Sources:
LA Times: Student loan borrowers in default may see wages garnished in 2026
Fortune: Student loan borrowers wage garnishment: who is affected, how much can government take?
