Federal Student Loan Borrowers Face Wage Garnishment After Pandemic Pause Ends

Resumption of Federal Student Loan Repayments

• 🎯 Federal student loan borrowers who are in default must now confront their loan obligations as the pandemic-era pause has concluded.
• 📊 As of June 2025, over 5 million borrowers are in default, representing 7% of the approximately $1.6 trillion in student debt.
• ⚠️ An additional four million borrowers are seriously delinquent, meaning they haven't made a payment in over 90 days, a number that could increase with repayment program changes.

Economic Impact of Debt Collection

• 📉 The high levels of personal debt in the country, exacerbated by inflation and the cost of living, contribute to this crisis.
• 💸 The Department of Education will begin sending out approximately 1,000 notices to defaulted borrowers, with more to follow, which could negatively impact the economy by reducing discretionary spending.
• 🏦 Debt collection efforts, paused for five years, are resuming under the Trump administration, with involuntary collections for those who default.

Actions for Defaulted Borrowers

• ⚡ Defaulted borrowers could face up to 15% of their pay garnished, but they have 30 days from receiving a notice to prepare.
• 💡 If in default, it's crucial to make a plan and reach out to your loan servicer to explore options like a rehabilitation plan.
• 🛠️ Garnishment can also be stopped by requesting a hearing or consolidating your loans.
• 🚫 Do not ignore the notice; consider picking up extra shifts or gig work to build repayment into your budget.