Trump Administration to Begin Garnishing Wages of Student Loan Borrowers in Default
The Trump administration has announced that it will start garnishing the wages of student loan borrowers who are in default early next year. According to the department, approximately 1,000 borrowers will receive notices the week of January 7, with more notices to be sent out on an increasing scale each month. This move is expected to affect millions of borrowers who are considered in default, meaning they are 270 days past due on their payments.
The department has stated that it will begin collection activities only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans. In May, the Trump administration ended the pandemic-era pause on student loan payments, beginning to collect on defaulted debt through withholding tax refunds and other federal payments to borrowers. This decision has been criticized by some, who argue that the department has failed to sufficiently help borrowers find affordable payment options.
Criticism and Concerns
Persis Yu, deputy executive director for the Student Borrower Protection Center, has criticized the decision to begin garnishing wages, stating that it is “cruel, unnecessary, and irresponsible.” Yu argues that the administration should be focusing on helping borrowers find affordable payment options, rather than seizing their wages. The Biden administration had previously tried to give broad forgiveness to student loans, but those efforts were eventually stopped by courts.
The move to begin garnishing wages has raised concerns among borrower advocates, who argue that it will only exacerbate the existing student debt crisis. With millions of borrowers already struggling to make payments, the addition of wage garnishment could push many over the edge. The department’s decision has been seen as a step backwards, undoing the progress made during the pandemic-era pause on student loan payments.
Next Steps and Resources
Borrowers who are in default or at risk of default should take immediate action to explore their options. This may include reaching out to their loan servicer to discuss possible repayment plans or seeking assistance from a non-profit credit counseling agency. The Student Borrower Protection Center and other advocacy groups are also available to provide guidance and support to borrowers navigating the complex student loan system.
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