As if student loan borrowers didn’t have enough to worry about, some who fell into default during the pandemic-era payment pause are now seeing a long-dreaded consequence hit their paychecks: Federal wage garnishment has officially restarted for the first time in roughly five years. The move could affect millions of Americans already struggling with higher prices, stagnant wages, and the weak job market for college grads.
Student loan borrowers in default are at risk of having up to 15% of their wages garnished, the Education Department announced last year, although it didn’t initially give an exact date when those collections would begin. But the time has come.
Wage garnishment “is a scary concept since they can take 15% of after-tax income,” Ashley Morgan, debt and bankruptcy attorney and owner of Ashley F. Morgan Law PC, told Fortune. Morgan has worked with thousands of clients to resolve debt and credit issues.
What’s happening now
The Trump administration’s Education Department has begun sending garnishment notices to defaulted federal student loan borrowers, with the first wave going out this week.
