The U.S. Education Department announced that the Trump administration will initiate wage garnishment for student loan borrowers in default starting early next year. This decision comes as part of a broader strategy to collect debts from individuals who have fallen behind on their student loan payments.
Beginning the first full week of January 2024, the Education Department plans to send out notices to approximately 1,000 borrowers currently in default. These notices will inform borrowers that their wages may be garnished as soon as 30 days after they receive the notification. The agency indicated that the number of notices will increase monthly, reflecting a systematic approach to addressing the defaulted loans.
The Education Department clarified that the garnishment process will only commence after borrowers have been duly notified and provided with an opportunity to repay their loans. According to the Federal Student Aid office, employers can be instructed to withhold up to 15% of a borrower’s disposable income to recover the debt without needing to go through court proceedings.
Critics have been quick to respond to the announcement. Persis Yu, deputy executive director and managing counsel for the advocacy group Protect Borrowers, condemned the decision, labeling it “cruel, unnecessary, and irresponsible.” In a statement, Yu expressed concern that the administration is prioritizing wage garnishment over supporting borrowers in making affordable payments, especially as millions are on the brink of default.
The Education Department had previously paused collections on federal student loans during the early stages of the COVID-19 pandemic, resuming these activities in May 2023. This resumption has drawn scrutiny, particularly given the ongoing economic challenges faced by many Americans.
Under the garnishment policy, borrowers will receive a detailed notice that outlines the intention to garnish wages, the nature and amount of their debt, and their rights regarding the process. This includes the opportunity to inspect records related to their debt and the option to avoid garnishment through voluntary repayments.
As the administration moves forward with this strategy, the implications for borrowers could be significant, potentially impacting their financial stability. The conversation around student loan debt continues to evolve, with advocates urging for more supportive measures rather than punitive actions.
