Department of Education Resumes Wage Garnishments for Defaulted Federal Student Loans Starting January 7 After Months of Delays
DoE Resumes Wage Garnishments on January 7
The Department of Education (DoE) is moving forward with plans to resume wage garnishments for borrowers in default on their federal student loans, setting the start date for notifications on January 7, 2025. This action follows months of delays from an originally planned summer start and marks a significant tightening of collection efforts against delinquent borrowers.
The initial phase will target approximately 1,000 borrowers who have failed to make any payments on their loans for more than a year. The resumption of garnishments means that a portion of a borrower's disposable income can be legally withheld by the government to repay defaulted federal student debt.
Policy Shift Follows Months of Delays
The decision to restart wage garnishments signals the end of a prolonged period of forbearance and relaxed collection practices that were implemented during and after the pandemic. Although originally scheduled to start in the summer, the process was postponed several times, leading to the early 2025 start date.
Starting on Jan. 7, the Department of Education will begin notifying defaulted federal student loan borrowers that their income will be cut. This aggressive collection method is typically used after other rehabilitation and repayment options have been exhausted or ignored by the borrower.
Initial Scope and Financial Impact
The first wave of collection notices will be dispatched the week of January 7. These notices inform the recipients that their income will be subject to cuts as the DoE begins the process of seizing wages to cover outstanding debt obligations.
The first notices of wage garnishment will be sent the week of Jan. 7 to 1000 borrowers who haven't made a payment in over a year.
This initial group of 1,000 borrowers represents those who are deeply entrenched in default, having gone without making a single payment for over 12 months. While the initial number is small, the policy sets a precedent for broader enforcement across the millions of Americans currently holding federal student debt.
Addressing the Default Crisis
The resumption of wage garnishments is a critical component of the government’s strategy to address the growing volume of federal student loan defaults. Default occurs when a borrower fails to make payments for an extended period, typically 270 days, depending on the loan type.
Defaulting on federal student loans carries severe consequences, including damage to credit scores, loss of eligibility for future federal aid, and, crucially, the potential for wage garnishment. The move is expected to increase financial strain on the affected individuals, as the garnishment process allows the Department of Education to seize up to 15% of a borrower's disposable pay.
