By Piper Hudspeth Blackburn, CNN
(CNN) — The Trump administration will begin garnishing wages of student loan borrowers in default starting in January, the Education Department told CNN on Tuesday.
“We expect the first notices to be sent to approximately 1,000 defaulted borrowers the week of January 7, and the notices will increase in scale on a month-to-month basis,” the department said in a statement.
The move comes months after the administration restarted collecting federal student loans in default, which happens after 270 days without payment. The process, known as administrative wage garnishment, allows the agency to order non-federal employers to withhold part of an employee’s income to pay off the student loans.
If the department scales up its wage garnishment efforts, millions could be affected. The department said in April that more than 5 million borrowers were in default and nearly 4 million more were delinquent, which means they hadn’t made a payment in more than 90 days.
Earlier this year, the government also resumed the Treasury Offset Program, which collects defaulted debts by garnishing federal and state payments, such as tax returns or Social Security benefits.
Critics have insisted that beginning wage garnishment will add stress to borrowers struggling with higher costs.
“As millions of borrowers sit on the precipice of default, this Administration is using its self-inflicted limited resources to seize borrowers’ wages instead of defending borrowers’ right to affordable payments,” Protect Borrowers Deputy Executive Director Persis Yu said in a statement on Tuesday.
Student loan borrowers stand to face even more changes in the coming months. President Donald Trump’s landmark tax and spending cuts package – the “One Big Beautiful Bill Act” – passed earlier this year, placed new caps on the amount students can borrow in federal student loans for graduate school and how much parents can borrow to help pay students’ tuition. It also eliminated certain deferments on student loans and created a much more limited set of repayment options.
And earlier this month, the Trump administration announced an agreement to end the SAVE plan, a Biden-era repayment plan that has faced legal challenges for years, affecting nearly 8 million borrowers. If approved in federal court, borrowers will have a “limited time” – the amount not yet outlined – to enroll in a new plan.
Borrowers in default can no longer receive deferment or forbearance, which allow borrowers to temporarily stop making payments on loans, according to the Department of Education’s website. They will also no longer have the ability to choose a repayment plan. For borrowers who are facing severe financial stress, it’s possible to discharge loans in bankruptcy if they meet certain criteria.
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