Trump Cabinet Resumes New Wage Garnishment for Student Loans

For the first time in five years, the federal government is restarting a tough policy for people who have fallen behind. On Tuesday, December 23, 2025, the Department of Education confirmed that it will resume wage garnishment for defaulted student loan borrowers. This practice was paused back in 2020 because of the COVID-19 pandemic. Trump Cabinet

Now, the Trump administration says it is time to return to regular collections to protect taxpayers. This “major shift” will impact thousands of families across the country starting very soon. In this article, we will break down the timeline, the rules, and how you can protect your paycheck.

The Timeline for the First Notices

If you are worried about your wages, you should mark your calendar for January 7, 2026. This is the week when the Department of Education will start sending out the first official notices. A spokesperson said that about 1,000 borrowers will be in this first group. After that, the government plans to increase the number of notices sent out every month.

This “phased approach” allows the department to handle the work without overwhelming the system. It is important to remember that the government must give you at least 30 days of notice before they actually take any money. This gives you a small window of time to act and find a solution.

Who is Considered “In Default”?

You might be wondering if your loans are at risk of being garnished. A borrower is officially in “default” when they have not made a payment for more than 270 days. This is roughly nine months of missed payments. If you are just a few weeks or months late, you are considered “delinquent,” but not yet in default. Once you hit that 270-day mark, the government has the legal right to take money without taking you to court first.

Currently, there are about 5 million borrowers in default, and nearly 4 million more are behind on their payments. This means millions of people could eventually receive a notice in the mail.

How Much Money Can They Take?

The amount of money the government can take from your paycheck is limited by federal law. Usually, a loan holder can order your employer to withhold up to 15% of your disposable pay. Disposable pay is the money you have left after your employer takes out things like taxes and insurance. However, there is a “safety net” to make sure you have enough to survive.

The law says you must be left with a weekly amount equal to at least 30 times the federal minimum wage. Since the minimum wage is $7.25, you are guaranteed to keep at least $217.50 per week. For many low-income workers, this 15% cut can still be a very heavy burden to carry.

Why the Administration is Acting Now

The Trump administration believes that resuming collections is a matter of fairness for all Americans. White House Press Secretary Karoline Leavitt stated that “debt cannot be wiped away” and that taxpayers should not foot the bill. The government argued that the Biden-era policies gave borrowers “false hope” of forgiveness that never actually happened.

Education Secretary Linda McMahon said the goal is to help borrowers “return to repayment” for their own financial health. By restarting garnishments, the administration hopes to bring back “common sense” to the $1.6 trillion student loan system. They want to make sure that those who took out loans are the ones who pay them back.

The Return of the Treasury Offset Program

Wage garnishment is not the only tool the government is using to collect old debts. Earlier in 2025, the administration also resumed the Treasury Offset Program. This program allows the government to seize your federal tax refunds and even a portion of your Social Security benefits.

If you were expecting a big refund in the spring of 2026, it might be taken to pay off your defaulted loans instead. This “double hit” of losing both wages and tax refunds is a major concern for many families. It is a reminder that the government has many ways to get its money back once a loan is in default.

Critics Call the Move “Cruel and Irresponsible”

Not everyone agrees with the decision to restart garnishments during a difficult economy. Advocates for student borrowers, like Persis Yu from the Student Borrower Protection Center, called the move “cruel and unnecessary.” They argue that families are already struggling with high prices for food and rent.

Julie Margetta Morgan, a former education official, said the president is “further punishing families” instead of solving the affordability crisis. Critics are also worried that the timing is bad because health care costs for many people are expected to rise in 2026. They believe the government should focus on making payments affordable instead of seizing wages.

Your Rights During the 30-Day Notice Period

If you receive a garnishment notice on January 7, do not panic immediately. You have 30 days to take action before the order is sent to your employer. During this time, you have the right to inspect and copy the records of your debt. You can also request a hearing if you believe the garnishment would cause “extreme financial hardship.”

Most importantly, you can avoid the garnishment altogether by entering into a voluntary repayment agreement. If you agree to start making monthly payments that you can afford, the government will stop the garnishment process. This is the best way to stay in control of your own paycheck.

How to Get Out of Default for Good

If you are already in default, there are two main ways to get your loans back into “good standing.” The first is loan rehabilitation, where you agree to make nine on-time monthly payments. Once you finish, the default is removed from your credit history. The second option is loan consolidation, which combines your old loans into a new one.

This is faster than rehabilitation but does not remove the default record from your credit report. Both options will stop wage garnishment and make you eligible for federal student aid again. Getting out of default is the only way to regain access to lower-priced repayment plans and potential forgiveness.

The Impact of the “One Big Beautiful Bill Act”

The restart of garnishments is part of a larger change in student loan laws under the “One Big Beautiful Bill Act.” This law, passed earlier in 2025, placed new caps on how much graduate students and parents can borrow. It also ended some popular Biden-era repayment programs like the SAVE plan.

The administration wants a simpler system with fewer options for skipping payments. They believe that by making the rules stricter, they can stop the national student debt from growing even larger. For borrowers, this means the “safety nets” of the past few years are disappearing, and the rules are becoming much more firm. Trump Cabinet

Staying Proactive in 2026 Trump Cabinet

In conclusion, the resumption of student loan wage garnishment is a major “wrinkle” for millions of Americans. Starting in January 2026, the first wave of notices will go out to borrowers who have defaulted. While the administration sees this as a necessary step for the economy, many advocates fear it will hurt low-income families. Trump Cabinet

The most important thing you can do is stay informed and open your mail. If you get a notice, use the 30-day window to negotiate a payment plan or request a hearing. By being proactive, you can protect your wages and start the journey toward getting out of default for good. Trump Cabinet

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