As Student Loan Delinquencies And Defaults Accelerate, Government To Garnish Wages

Student loan delinquencies and defaults are rising sharply, and the federal government is restarting aggressive collection tactics, including garnishing wages, tax refunds, and some benefits from borrowers in default.

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What is happening now

• Serious student loan delinquency (90+ days late or in default) has jumped in 2025; about 9.4% of total student debt was 90+ days delinquent or in default in 2025 Q3, up from 7.8% in Q1.​

• The Education Department resumed collections on defaulted federal loans in 2025 after the pandemic pause, paving the way for wage garnishments and other enforcement.​

• The Trump administration has announced that wage garnishment on defaulted federal student loans will ramp up in early 2026, with initial garnishment notices going out starting the week of January 7 to borrowers who have not made payments for over a year.​​

What wage garnishment means

• For defaulted federal loans, the government can order employers to withhold part of a borrower’s paycheck through “administrative wage garnishment,” without first going to court.​

• Federal rules allow up to 15% of disposable pay to be garnished for defaulted federal student loans, until the default is resolved or the debt is paid.​

• The government can also intercept federal tax refunds and certain federal benefits (including some Social Security payments) to collect on defaulted loans.​

Who is at risk

• A borrower is typically delinquent the day after a missed payment; if no payment is made for about 270 days (nine months), the loan is considered in default and becomes eligible for collections and garnishment.​

• As of late 2025, estimates suggest roughly 5–5.5 million federal student loan borrowers are already in default, with many more tens of millions carrying student debt and facing elevated delinquency rates.​​

• Credit bureau and policy analyses warn of a “default cliff,” with millions of additional borrowers at risk of sliding from delinquency into default as pandemic-era relief fully unwinds.​

Steps borrowers can take

• Contact loan servicer immediately if behind; options can include income-driven repayment, deferment, forbearance, consolidation, or using any available “Fresh Start” or similar default-cure programs if still open.​

• Before garnishment begins, borrowers should receive written notice (generally at least 30 days in advance) explaining the government’s intent and how to request a hearing or set up a payment plan to try to stop or reduce garnishment.​

• Even after garnishment starts, borrowers may be able to rehabilitate or consolidate defaulted loans to exit default and eventually end wage withholding.​

If you share whether you are delinquent, in default, or just worried about falling behind, a tailored list of concrete next steps can be outlined for your situation.