The White House Says It Will Seize Wages for Student Loans in Collection—Here’s What Borrowers Can Expect

 

As federal student loan payments resume after a years-long pandemic pause, the

 Biden administration has announced stricter enforcement measures for borrowers

 who fall behind, including wage garnishment for those in default. Here’s what

 affected borrowers need to know.

Wage Garnishment Returns for Defaulted Loans

The U.S. Department of Education (ED) has confirmed that it will resume

 administrative wage garnishment (AWG) for borrowers with defaulted federal

 student loans. This means the government can withhold up to 15% of a borrower’s

 disposable pay without a court order to recover unpaid debt.

While wage garnishment was temporarily paused during the pandemic, the ED is

 now reactivating collections for borrowers who have not taken steps to resolve

 their defaulted loans.

Who Is at Risk?

Borrowers with federal student loans in default (typically after 270+ days of non-

payment) are most at risk of wage garnishment. Private student loans are not

 subject to federal garnishment rules but may face other collections actions.

The ED contracts with private collection agencies (PCAs) to pursue defaulted loans,

 and these agencies can initiate wage garnishment if borrowers do not respond to

 repayment offers.

What Borrowers Can Do to Avoid Garnishment

Before wages are seized, borrowers typically receive a notice outlining their

 options. To stop or prevent garnishment, borrowers can:

Rehabilitate the Loan – Entering loan rehabilitation (making nine voluntary, on-

time payments over 10 months) removes the loan from default status and stops

 garnishment.

Consolidate the Loan – Federal loan consolidation can also resolve default, but

 borrowers must agree to a repayment plan first.

Negotiate a Settlement – Some borrowers may qualify for a lump-sum settlement

 for less than the full amount owed.

Request a Hearing – Borrowers can challenge garnishment if they believe it would

 cause financial hardship or if there are errors in the debt claim.

Biden’s Broader Student Debt Relief Efforts

While the administration is tightening collections, it has also introduced new relief

 programs, including:

The SAVE Plan, an income-driven repayment option that lowers monthly

 payments.

Ongoing efforts to cancel debt for borrowers who were misled by for-profit schools

 or qualify under Public Service Loan Forgiveness (PSLF).

Bottom Line

Borrowers in default should act quickly to explore repayment options before wage

 garnishment begins. The ED encourages borrowers to contact their loan servicer or

 visit StudentAid.gov to review their choices.

For those already facing garnishment, taking steps like loan rehabilitation can stop

 The withholdings help restore financial stability.