U.S. Government Resumes Wage Garnishment for Defaulted Student Loans

The Trump administration has announced it will resume collections on defaulted federal student loans beginning May 5, after a five-year pause that started during the Covid-19 pandemic. Borrowers who are in default or late-stage delinquency face having their wages, federal pensions, tax refunds, and other federal payments withheld under the Treasury Offset Program. More than five million borrowers are already in default, and millions more are nearing that status, with officials warning that nearly 10 million people could be in default within months. The White House emphasized this move is intended to prevent the cost of unpaid loans from being transferred to taxpayers, arguing that debt cannot simply be wiped away. Borrowers who have missed payments for over 270 days will receive notices about the upcoming collections and potential wage garnishment, which could claim up to 15% of their salaries. The administration criticized previous efforts at widespread loan forgiveness, stating that the executive branch lacks authority to cancel debt unilaterally and pledging to manage the loan program according to law.