Wage Garnishments for Defaulted Student Loans to Begin Early Next Year

Months after being originally announced, defaulted federal student loan borrowers will have their wages cut by the Department of Education early next year.

Since this summer, the Department of Education has said it will garnish wages from borrowers who have defaulted on their loans. On Jan. 7, the first batch of defaulted borrowers, approximately 1,000, will be notified that their wages are set to be garnished, the Department of Education said in an email to Investopedia. The Department said the number of garnishment notices issued to defaulted borrowers will increase each month.

After a borrower defaults on their student loan, which typically occurs after not making a payment for more than 270 days, they receive a notice stating that their income will be garnished by up to 15% to compensate for the missed payments. They have 30 days after the notice before cuts to their income start, during which they can negotiate their repayment terms or request a hearing to stop their wages from being cut.

Over the past few years, millions of student loan borrowers have fallen behind on their payments and defaulted on their loans, following the end of the COVID-19 pandemic-era payment pause in 2023. As of September 30, 2025, 5.2 million borrowers were in default, and nearly 6.6 million were between one month and one year delinquent.

Borrowers who are currently in default and want to avoid wage garnishment can request that their loans be consolidated or placed in rehabilitation to bring them back into good standing.

The Department of Education originally announced that it would resume collections on defaulted student loans in May and begin garnishing borrowers’ income later in the summer.

In mid-May, the department began withholding tax refunds from borrowers who defaulted on their student loans. This was the first time that defaulted borrowers faced garnishments in about five years, since the onset of the COVID-19 pandemic.

However, a department spokesperson told The Washington Post that the process of resuming garnishment for borrowers’ personal, non-federal wages took longer than expected, partly due to the government shutdown.

Additionally, in June, the Department of Education said it had not and would not garnish any Social Security benefits from defaulted borrowers. The department confirmed in an email to Investopedia that it is continuing to pause Social Security garnishment.