5.3 million student loan borrowers face wage garnishment starting May 5

The federal government has resumed collections on defaulted federal student loans after a five-year pandemic-era pause, affecting over 5 million Americans who could now face wage garnishment, tax refund seizures, and reductions in federal benefits such as Social Security. Borrowers in default are again subject to the Treasury Offset Program, and administrative wage garnishment can claim up to 25% of take-home pay. The end of the 'on-ramp' protection period has already led to a significant increase in delinquencies, with about 15.6% of federal borrowers now past due, a figure expected to rise. The resumption of collections is part of broader changes to the student loan system, with the Trump administration emphasizing transparency and compliance, marking a return to stricter enforcement. Delinquency and default can severely impact credit scores, making it harder for borrowers to secure mortgages or auto loans and potentially harming their employment prospects. Borrowers can seek relief through loan rehabilitation, consolidation, or enrolling in income-driven repayment plans, but options are limited once loans are in default.