The US government is set to restart aggressive collection tactics on defaulted student debt, a move that will impact millions of borrowers across the country. The Trump administration has confirmed it will begin garnishing the wages of those in default starting in January.
Notices to Be Issued from January 7th
The first wave of formal warnings will be sent the week of January 7, targeting approximately 1,000 borrowers initially. Officials plan to escalate the programme significantly, with more notices scheduled to be dispatched each subsequent month.
This action marks a decisive end to the pandemic-era relief that paused such collection activities. Borrowers are classified as being in default if their payments are 270 days or more past due. Under the revived policy, individuals will receive a 30-day notice before any deductions from their pay begin.
Criticism Amid Economic Challenges
The decision has drawn sharp criticism from consumer advocacy groups. Persis Yu, Deputy Executive Director of the Student Borrower Protection Center, condemned the policy restart. She labelled it as "cruel, unnecessary, and irresponsible", highlighting the ongoing financial pressures facing many households.
This criticism centres on the concern that forcibly taking wages could exacerbate financial hardship for families already struggling with the cost of living, without addressing the root causes of the student debt crisis.
What Happens Next for Borrowers
The process for affected borrowers is set to be automatic following the notice period. The key steps are:
- Receipt of a formal notice from the US Department of Education.
- A 30-day window to address the default before garnishment starts.
- Subsequent deductions made directly from wages by employers.
This development underscores the shifting landscape of student loan repayment following the expiry of emergency measures. Borrowers who are behind on payments are urged to contact their loan servicer immediately to explore options such as rehabilitation or income-driven repayment plans to avoid garnishment.
