Federal student loan collections have resumed, and borrowers in default face possible wage garnishment of up to 15% of after-tax income beginning later this summer. Nearly 2 million borrowers are at immediate risk, with an additional 1–2 million expected to default in coming months. The Education Department announced the policy but did not specify an exact start date or confirm borrower notifications. Borrowers can pursue options such as negotiating payment plans, loan rehabilitation, or requesting hearings to avoid or stop garnishment. Wage garnishment marks a departure from prior deferment and forgiveness measures during the pandemic relief period.
Student loan borrowers in default could have up to 15% of their wages garnished by the U.S. government starting later this summer. Nearly 2 million borrowers are at immediate risk of wage garnishment, with an additional 1 million-2 million expected to default in the coming months. Options such as negotiating payment plans, loan rehabilitation, or requesting a hearing may help avoid or halt wage garnishment.
Student loan borrowers who are in default are at risk of having up to 15% of their wages garnished, the Education Department announced earlier this year, although it never gave an exact date when those collections would begin other than saying "later this summer." In May, the Education Department resumed student loan collections, ending the relief measures of the pandemic era when borrowers had some reprieve.
The Education Department did not respond to Fortune 's request for comment on when wage garnishment would begin or whether borrowers would be notified ahead of time. "Wage garnishment for defaulted student loans is very possible," Ashley Morgan, debt and bankruptcy attorney and owner of Ashley F Morgan Law PC, told Fortune. "It is a scary concept since they can take 15% of after-tax income." Morgan has worked with thousands of clients to resolve debt and credit issues.
Collection
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