The landscape of federal student loan collection has officially shifted as of January 14, 2026. After years of pandemic era pauses, the U.S. Department of Education has resumed administrative wage garnishment for borrowers who have fallen into default. This change marks a return to standard collection practices, aiming to recover unpaid debts from the approximately 5.5 million Americans currently in default. Notices began hitting mailboxes last week, signaling that the government is moving quickly to restart involuntary withholdings for those who have not made a payment in at least 270 days.
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Understanding How Wage Garnishment Works
Administrative wage garnishment is a tool that allows the federal government to collect on defaulted student loans without first obtaining a court order. Under this authority, the Department of Education can require your employer to withhold a portion of your pay and send it directly to the government. This process is generally only used as a last resort for loans that are severely past due.
The amount that can be taken is limited by federal law to ensure that workers can still meet their basic needs. Specifically, the government can garnish up to 15 percent of your disposable pay. Disposable pay is the amount of money left over after mandatory deductions like federal and state taxes have been removed. Additionally, federal rules protect a minimum amount of your weekly income, ensuring you keep at least $217.50 per week regardless of the debt owed.
Who is Impacted by the January Restart
The restart of garnishment is being rolled out in phases, starting with a group of approximately 1,000 borrowers who received notices during the first week of January. This initial wave primarily targets individuals who were already in default prior to the pandemic or those who have failed to enter a repayment plan since the final grace periods ended last year.
- Default Status: Only loans that are at least 270 days past due are eligible for garnishment.
- Employment Verification: The government must verify your current employer before an order can be issued.
- Rolling Notices: The Department of Education plans to increase the number of notices sent out each month throughout 2026.
- Exempt Groups: Borrowers who are currently in good standing, enrolled in an active repayment plan, or in an approved deferment are not subject to garnishment.
- Other Offsets: In addition to wages, the government may also intercept tax refunds and a portion of Social Security benefits for defaulted loans.
Your Rights and the 30 Day Response Window
Before any money is actually taken from your paycheck, the law requires the Department of Education to send a written notice of intent to your last known address. This notice is a critical document because it opens a 30 day window for you to take action. If you respond within this timeframe, you can often stop the garnishment process before it ever reaches your employer’s payroll department.
During this 30 day period, you have the right to inspect your loan records and request a formal hearing if you believe the debt is not yours or the amount is incorrect. You can also object based on extreme financial hardship. If you can prove that losing 15 percent of your pay would prevent you from covering essential living costs like rent or utilities, the government may reduce or temporarily suspend the garnishment.
Options to Stop Garnishment and Resolve Default
If you have received a notice, you still have several pathways to bring your loans back into good standing. Resolving the default not only stops the garnishment but also restores your eligibility for federal benefits like income driven repayment plans and additional student aid.
One common option is loan rehabilitation, which requires you to make nine consecutive, affordable monthly payments. Once you complete the program, the default is removed from your record and garnishment stops. Another faster option is loan consolidation, where you combine your defaulted loans into a new Direct Consolidation Loan. However, consolidation is typically only available as a way to stop garnishment if the withholding hasn’t actually started yet. Taking action early is the most effective way to maintain control over your income.
Comparison of Student Loan Resolution Methods
| Resolution Method | Time to Complete | Main Benefit | Impact on Garnishment |
| Rehabilitation | 9 to 10 Months | Removes default from credit report | Stops after 5th or 9th payment |
| Consolidation | 30 to 60 Days | Fast return to good standing | Must be done before withholding starts |
| Full Payment | Immediate | Debt is completely settled | Stops immediately |
| Hardship Hearing | Varies | Can reduce the amount taken | May lower rate below 15 percent |
