The dawn of 2026 may bring a harsh financial reality for millions across the UK who hold federal student loans. After a multi-year pandemic-induced pause, the government is set to resume wage garnishment for borrowers who have defaulted on their payments, a move that could directly impact an estimated 5.3 million individuals.
Why Wage Garnishment is Returning
The Biden administration initially suspended payments and garnishment as an economic relief measure during the Covid-19 shutdown. Kevin Ladd, COO of Scholarships.com, explained that this pause was "public-health- and economic-relief-driven" and lingered even after general repayments resumed in late 2023. The resumption of garnishment in 2026 is now viewed as a return to standard federal collection practices, signalling the end of pandemic-era concessions.
Who is at Risk and How Much Could be Taken?
Borrowers enter default after failing to make scheduled payments for 270 days. This primarily affects those with loans from the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan Program. The process is not sudden; the Department of Education must notify a borrower by letter at least 30 days in advance.
Once initiated, the government can legally garnish up to 15% of a borrower's disposable pay. This deduction will continue until the defaulted loan is fully repaid or the borrower successfully resolves their default status.
Your Options to Avoid or Halt Garnishment
Debt experts stress that communication and early action are crucial. Leslie H. Tayne, founder of Tayne Law Group, advises borrowers to engage with lenders rather than avoid them. There are three primary paths to stop wage garnishment:
1. Loan Rehabilitation: This involves agreeing to make nine "voluntary, reasonable, and affordable" monthly payments over ten consecutive months with your loan holder.
2. Loan Consolidation: You can consolidate defaulted loans into a new Direct Consolidation Loan, which then requires repayment under an income-driven plan. Note: loans already under garnishment are not eligible, so timing is critical.
3. Full Payoff: Paying the entire defaulted balance ends garnishment immediately, though this is often not feasible.
Mark Kantrowitz of PrivateStudentLoans.guru notes that for some, the garnished amount "is less than what the borrower would have paid under an income-driven repayment plan." However, if garnishment proceeds, Tayne recommends revisiting your budget, cutting expenses, and considering major lifestyle adjustments to accommodate the reduced income.
The overarching message from experts like Kevin Ladd is clear: Do not wait. Contact your loan servicer, discuss income-driven repayment plans, and explore your options proactively to avoid the severe step of wage garnishment.
