Overview
- Roughly 1,000 defaulted borrowers began receiving wage-garnishment notices the week of Jan. 7, with larger batches expected in the months ahead.
- For federal loans in default, authorities can seize tax refunds and some federal benefits and withhold up to 15% of disposable pay after required notice periods.
- Federal Student Aid outlines 65 days’ notice before federal payment offsets and 30 days’ notice before wage withholding, with default typically defined as about 270 days of missed payments.
- Borrowers can act to halt or limit garnishment by negotiating a payment plan within the 30‑day window, entering loan rehabilitation with nine on‑time monthly payments—after which garnishment stops by rule—or consolidating to exit default.
- A written hearing request postmarked within 30 days can challenge the action; decisions generally arrive within about 60 days and can pause garnishment for up to 12 months or reduce the percentage withheld, as advocates warn of disproportionate harm to Black borrowers facing higher unemployment.