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yesterday

Education Department Begins Wage-Garnishment Notices for Defaulted Student Loans

Notices precede possible paycheck withholdings of up to 15% for borrowers 270 days past due.

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.
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Overview

  • About 1,000 borrowers are receiving the first notices this week, with larger groups to follow each month.
  • Federal rules permit administrative garnishment without a court order after at least 30 days’ written notice to the borrower.
  • Roughly 5 to 5.5 million borrowers are in default, a status that triggers collections after about nine months of missed payments.
  • Borrowers may request a hearing, assert financial hardship, or use rehabilitation or consolidation to exit default and halt garnishment.
  • The government is also resuming tax-refund and benefit offsets, while the end of SAVE and restored taxability for most IDR forgiveness increase potential financial strain.