Student Loan Borrowers in Default May Face Wage Garnishment Starting Early 2026

Beginning the week of January 7, 2026, the U.S. Department of Education will start issuing formal notices to roughly 1,000 borrowers out of the five million individuals currently in default on their federal student loans. These letters will inform recipients that their wages could be subject to garnishment if the debt remains unpaid.

How the Process Works

According to the department’s guidelines, once a borrower’s loan is in default for more than 270 days, the agency may take collection actions, including:

• Filing a lawsuit against the borrower.
• Obtaining a court order to withhold a portion of the borrower’s paycheck.
• Seizing tax refunds and other federal payments.

The upcoming notices serve as a final warning before such measures are implemented.

Who Is Affected?

The targeted group represents a small fraction—about 0.02 %—of the total default pool. The department says these individuals were selected because they have a steady source of income and have not responded to previous outreach attempts.

What Borrowers Can Do

Borrowers who receive a garnishment notice have several options to avoid wage withholding:

1. Reinstate the loan by paying the full amount due, including accrued interest and fees.
2. Consolidate the loan into a new federal loan, which may reset the repayment clock.
3. Apply for an income‑driven repayment plan that could lower monthly payments to a more manageable level.
4. Submit a request for hardship deferment or forbearance if qualifying circumstances exist.

Contacting the loan servicer promptly is essential; the department emphasizes that early communication can prevent the loss of wages.

Potential Impact

While wage garnishment is a powerful tool for the government, experts caution that it can create a cycle of financial strain for borrowers already struggling to make ends meet. Consumer‑advocacy groups recommend that borrowers explore all repayment alternatives before allowing garnishment to proceed.

For more information, borrowers should visit the Federal Student Aid website or call the Department of Education’s help line at 1‑800‑433‑3243.