Washington: The administration of United States President Donald Trump has announced plans to resume wage garnishments for borrowers who have defaulted on their federal student loans, marking the first such action since the COVID-19 pandemic began.
According to a spokesperson for the US Department of Education, affected borrowers will start receiving official notices from January 7. The initial phase is expected to impact around 1,000 borrowers, with the number set to increase steadily in the coming months.
While the department did not specify how borrowers were selected for the first round of garnishments or how many people could ultimately be affected, it said that collections are conducted only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans.
Under US federal law, the government is permitted to garnish up to 15 percent of a borrower’s disposable income, provided the individual is left with earnings equivalent to at least 30 times the federal minimum wage per week. The federal minimum wage currently stands at $7.25 per hour, unchanged since July 2009.
Student loan debt remains a major financial burden in the United States. Roughly one in six American adults holds student loan debt, which collectively amounts to about $1.6 trillion. As of April, more than 5 million borrowers had not made a payment in at least a year, according to data from the Department of Education.
The move comes as economic pressures intensify for many households amid rising living costs and a cooling labour market. Consulting firm Challenger, Gray & Christmas reported that more than 1.1 million people lost their jobs in 2025 as job growth slowed. Federal data has also shown mixed employment trends, with job losses recorded in October followed by modest gains in November.
During October and November, the US unemployment rate rose to 4.6 percent, the highest level since 2021, according to the Bureau of Labour Statistics. Critics have warned that resuming garnishments could further strain struggling families. Julie Margetta Morgan, a former deputy undersecretary at the Department of Education under former President Joe Biden, said the decision would worsen financial hardship for borrowers.
Julie Margetta Morgan stated that, “Instead of solving the affordability crisis that’s leaving Americans unable to pay their student loans, the president is further punishing families and forcing them to forgo the very basics.”
In addition to wages, federal authorities also have the power to garnish tax refunds, Social Security benefits and certain disability payments from borrowers who remain in default.
MOST READ | At least 2 dead in explosion at Pennsylvania nursing home
