The Trump administration will start garnishing the wages of student loan borrowers in default in January, CNBC reports.
According to the outlet, more than 5 million student loan borrowers are currently in default.
The number could soon increase to 10 million.
Trump administration to start seizing pay of defaulted student loan borrowers in January https://t.co/HQ6suyiCVR
— CNBC (@CNBC) December 23, 2025
CNBC explained further:
It will be the first time a portion of borrowers’ paychecks has been at risk since the beginning of the Covid pandemic, when collection activity was halted.
Starting the week of Jan. 7, the Education Department expects around 1,000 defaulted student loan borrowers to receive notices of administrative wage garnishment, the spokesperson said. After that, the number of notified borrowers will continue to increase.
ADVERTISEMENTThe U.S. government has extraordinary collection powers on federal debts, and it can seize borrowers’ federal tax refunds, wages, and Social Security retirement and disability benefits.
The Education Department can seize up to 15% of a student loan holder’s after-tax income to put toward their debt. By law, borrowers must be left with at least 30 times the federal minimum hourly wage ($7.25) a week, which is $217.50, said higher education expert Mark Kantrowitz.
The federal student loan system has faced widespread criticism for predatory lending practices and contributing to the significant rise in college tuition prices.
I don't understand how neither Congress nor the Trump admin has started work to get the govt out of the student loan biz
The govt is the world's largest predatory lender, granting loans often w/ little/no ROI + transferring wealth from young Americans to college administrators
— Carol Roth (@caroljsroth) November 20, 2025
This has nothing to do with financial literacy.
NOWHERE is the absence of these bedrock protections disclosed to students/parents before signing for the loans.
This is not about bad borrowers.
It's an unconstitutional loan scam.
And it's now a bonafide national threat. pic.twitter.com/gjA61vnQKo
— STUDENT LOAN JUSTICE (@StudentLoanJus1) December 22, 2025
“Make the universities liable for student loans. Will see a change in behavior very quickly,” Florida Gov. Ron DeSantis commented.
Make the universities liable for student loans.
Will see a change in behavior very quickly. https://t.co/IrDfOFc0tN
— Ron DeSantis (@RonDeSantis) December 22, 2025
The Hill noted:
The Trump administration in May ended the pandemic-era pause on student loan payments and began collecting on defaulted debt by withholding tax refunds and other federal payments to borrowers.
Government officials said it would begin wage garnishment in the late summer, but the process was slowed, in part, by the government shutdown, The Wall Street Journal reported.
The Education Department has said more than 5 million borrowers are in default, and only 38 percent of borrowers are current on their student loans.
