Student Loan Wage Garnishments Resume as Millions of Borrowers Face Payment Jumps
The federal government began garnishing wages of student loan borrowers in default in early 2026, resuming collection activity that was paused during the COVID-19 pandemic. Separately, seven million borrowers are expected to see their monthly payments increase due to Trump administration changes to repayment plans. Experts urge borrowers to act quickly to protect their options.
The federal government resumed garnishing wages of student loan borrowers in default in early 2026, ending a pause on collections that began during the COVID-19 pandemic.
Borrowers in default can have up to 15 percent of their disposable income withheld from their paychecks. The Education Department also has the authority to seize tax refunds and Social Security benefits from defaulted borrowers.
Separately, about seven million student loan borrowers are expected to see their monthly payments increase due to changes the Trump administration made to income-driven repayment plans. The Education Department restricted which borrowers can receive forgiveness credit when switching between repayment plans, potentially limiting options for millions of people.
Financial advisors say borrowers who are struggling should contact their loan servicer immediately. Options may include income-driven repayment plans, deferment, or forbearance, depending on the type of loan and the borrower's situation.
New federal loan caps may push some graduate students toward private lenders, which typically carry higher interest rates and fewer consumer protections than federal loans.
The changes come as auto debt in the United States reached $1.68 trillion, adding to the financial pressure many households are already facing from rising housing costs and inflation.
Borrowers who have not logged into their student loan accounts recently are encouraged to verify their contact information and check their repayment status.
