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yesterday

Education Department Begins Sending Wage-Garnishment Notices to Defaulted Student-Loan Borrowers

Officials cast the phased restart as enforcement of existing law, with larger batches expected after this week’s initial mailings.

December 29, 2024, Washington, DC: Department of Education building in Washington, DC with American Flag
Bebeto Matthews/AP Photo
Student loan borrowers who fell into default during the pandemic-era pause are now seeing a long-dreaded consequence hit their paychecks.
Stock image/file photo: Graduation cap university or college degree on stack US Dollar notes.

Overview

  • About 1,000 borrowers are receiving notices the week of Jan. 7, starting a 30-day window before employers may be directed to withhold up to 15% of disposable pay.
  • Borrowers are typically in default after roughly 270 days without payment, which triggers authority under the Higher Education Act to collect the full balance.
  • If wages cannot be garnished, the Treasury Offset Program can intercept tax refunds or other federal payments and, in some cases, Social Security or SSI.
  • Forgiveness through income-driven repayment is taxable again starting this month, while Public Service Loan Forgiveness remains tax-free.
  • The administration frames the move as protecting taxpayers and plans monthly expansions, and borrowers can request a hearing, rehabilitate, or consolidate to avert withholding.