Student Loan Wage Garnishment Could Begin Soon: How to Protect Your Paycheck

The Department of Education is ramping up collection efforts against borrowers in default on their federal student loans. And soon, the department is expected to come after borrowers’ paychecks by garnishing their wages.

The Trump administration announced earlier this year that administrative wage garnishment is expected to be initiated against defaulted federal student loan borrowers sometime this summer. 

“FSA will restart the Treasury Offset Program, administered by the U.S. Department of Treasury, on Monday, May 5, 2025,” said the department in an announcement in April. “All borrowers in default will receive email communications from FSA over the next 2 weeks making them aware of these developments and urging them to contact the Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. Later this summer, FSA will send required notices beginning administrative wage garnishment.”

It's unclear if the Department of Education has initiated administrative wage garnishment yet en masse for defaulted federal student loan borrowers. But it may begin quite soon. Here’s what borrowers should know.

What is administrative wage garnishment?

Administrative wage garnishment is one of the federal government’s most draconian tools to pursue defaulted student loan borrowers. The process allows the Department of Education to order an employer to withhold a portion of a borrower’s earnings from their paycheck — typically 15% — and send it to the department to be applied to the borrower’s student loan balance. 

Unlike private student loan lenders and other commercial creditors, the government does not require a court order to do this, and does not need to file a lawsuit against a borrower; they can garnish wages “administratively” simply by ordering an employer to do so after following certain procedural steps. A separate administrative collections program called Treasury Offset allows the government to intercept or offset federal benefits and income streams, such as tax refunds and federal salaries.

Only defaulted federal student loan borrowers are subject to wage garnishment

It’s important to understand that only borrowers who are in default on their federal student loans would be subject to wage garnishment. Under federal law, default occurs after being delinquent (behind) on federal student loan payments for a period of 270 days, or the equivalent of around nine months. 

Borrowers who are not in default on their federal student loans would not be at imminent risk of wage garnishment. This includes:

• Those who are in repayment under any available repayment plan.
• Borrowers who don’t have to make payments on their student loans because they are in a deferment or forbearance status.
• Borrowers who are behind on payments but haven’t yet gone into default. 

If you’re not sure what the status is of your federal student loans, you can log into your Department of Education account at StudentAid.gov. This portal will also provide information on your current loan servicer, which will have a separate website and login portal where you can get additional details on your loan status. 

Those who are behind on their federal student loan payments but haven’t yet defaulted can avert default by either paying the past due balance, or by requesting a retroactive deferment or forbearance to cancel out the past due balance and bring the account current. Contact your current loan servicer for details.

Student loan borrowers must be notified before wage garnishment can begin

Importantly, the Department of Education can’t just press a button and start immediately garnishing someone’s wages. Student loan borrowers are entitled to a formal notice (typically called a “Notice Prior To Wage Withholding”) that alerts them to the fact that the department is about to seize a portion of their paycheck. The notice gives the borrower 30 days to respond and try to avert wage garnishment such as by entering into a repayment plan, settling the debt or paying off the balance due, applying for an administrative discharge, or requesting a hearing based on hardship.

However, not everyone always receives this required notice. That’s because the department is not actually required to track someone down and confirm that they got it before starting the garnishment; all they have to do is send the wage garnishment notice to the borrower’s last address on file. 

So, if you moved and never updated your contact details with the Department of Education, you may not receive the notification and could miss your opportunity to avoid wage garnishment. If that happens, you can still later request a hearing, apply to have the student loan discharged, or settle or pay off the balance — but the wage garnishment won’t stop (if it’s already been initiated) until or unless the legal status of your student loan changes. 

Student loan borrowers can get out of default

Borrowers in default on their federal student loans who are at risk of wage garnishment do have pathways to get out of default. In addition to administrative discharge programs (such as the Total and Permanent Disability (TPD) discharge program or Borrower Defense to Repayment), there are programs that allow borrowers to back into good standing again and resume regular repayment.

Loan rehabilitation

One option is loan rehabilitation. This is a temporary repayment program where a borrower can make payments on their defaulted federal student loans for a period of at least nine months. The monthly payments must be “reasonable and affordable” under federal law and would be based either on a repayment formula similar to the Income-Based Repayment (IBR) plan, or based on a financial statement of the borrower’s income and expenses. 

After the borrower enters into a formal rehabilitation agreement and completes the required sequence of payments, their student loans are taken out of default and restored to good standing, at which point the borrower can apply for any available repayment plan they are eligible for.

Direct loan consolidation

Another default resolution option is Direct loan consolidation. This involves taking out a new federal loan from the Department of Education, which then pays off the underlying loans. Borrowers don’t have to make payments to get out of default through Direct loan consolidation, as long as they select an income-driven repayment plan for the new consolidation loan. And there is no credit check required — borrowers simply have a legal right to consolidate through the Direct loan program to get their student loans out of default status.

Pros and cons of rehabilitation vs. consolidation

Both rehabilitation and consolidation have some potential benefits and drawbacks. Rehabilitation can have a slightly better credit report outcome than Direct loan consolidation, but also can be more expensive and takes a lot longer to complete. Meanwhile, Direct loan consolidation can be a faster and easier process, but also can potentially erase any pre-existing IDR student loan forgiveness credit. 

And borrowers whose consolidation loan is disbursed on or after July 1, 2026 would be limited to the Repayment Assistance Plan (RAP), a new income-driven repayment option created under the “One, Big, Beautiful Bill” that critics argue is less favorable than other IDR options.