The Department of Education is Moving Forward with Wage Garnishment for Student Loan Borrowers in Default

We always aim to keep WNYers informed when it comes to college planning news. It’s not easy keeping up with all of the recent changes to things like FAFSA, Student loans, and other college planning resources, and that’s what we are here for. It’s vital to have someone to work with who is up to speed with all these changes, because it’s likely you won’t always have someone to turn to with questions. 

We have a new update to share with everyone, and it’s one of the most important ones that you will need to keep in mind as 2026 begins! The new year is starting with a new change for student loan borrowers, and it’s one that you will need a lot of help to understand and plan for. 

The current presidential administration and the Department of Education announced on December 23rd that, starting in January, they would garnish the wages of defaulted student loan borrowers. This is a significant change that will impact millions of people across the country, and it's our responsibility at Send Your Kids to College to explain its importance. 

In this blog, we will break down what it means to be in default, what garnishing wages means for student loan borrowers, and how to best plan for this in the future.

What Does it Mean to Be in Student Loan Default?

So what does this mean? What happens now? Let's answer both those questions! Since the COVID pandemic began, many student loan borrowers have not had to pay a lot on their loans. Starting the week of January 7th, default borrowers will receive notices about this change and how it affects their wages. To be a student loan borrower in default means: 

• You haven't paid for an extended period of time (270 days without a payment is where most people are capped)

• Someone could have come under a loss of benefits, which means at some point they lost eligibility for income-driven plans, deferment, or forbearance.

• It is also possible that your loan was sent to a collection agency, which means you receive additional fees to pay

Numbers show that 42 million people borrow on loans, and roughly 5 million people are currently borrowing on default, which just means that they have failed to repay. With his new change, another 5 million could be added to the default soon.

The U.S. Department of Labor: wage garnishment is a legal procedure in which a person's earnings are required by court order to be withheld by an employer for the payment of a debt, such as child support, for example. If you’re someone who is trying to cover your essential living expenses while managing other financial obligations to stay consistent with being stable with the money you have, this will now be a tricky situation to maneuver around.

The last political administration worked on giving people a pause on their loan repayments, along with forgiving them on their loans, and now many other new changes have removed that barrier. Given where the economy is right now in the United States, this is an update that will give people a lot of worry, since one of the biggest things that Americans are trying to get a handle on is their economic status, and student loans are always something people hope doesn’t take away from their finances.

Why Coming Up With a Plan for Student Loans is Important

You have to have been given sufficient notice about this far in advance before the garnishment can happen. Only around 1,000 borrowers early this month will be receiving those notices, and more are scheduled for the following months. Whether or not you are one of the people who get the notice now or 2 months from now is not as important as being up to date on this news RIGHT NOW. 

And this brings us to a conversation that you will have to have with yourself and those around you who will also be affected. We understand how this can affect you in a way that requires major changes in your life, but there’s always a light at the end of the tunnel. That’s where we at Send Your Kids to College come in to help you in this journey.

Planning how you handle your student loans as a default borrower and managing them effectively comes with a long process, but one that will be worth it in the end. Some of the strategies you can employ when planning are thorough and help you find the best possible avenue for where you go next.

College planning in Buffalo and WNY is our #1 priority as an organization! We want to reassure you that your time and money are in our best interest. We have a multitude of resources to help you in this process:

We have a page dedicated to covering Federal Student Loan Rates, and judging by last year's metrics, they could increase again in 2026. We also have a Student Loan Crisis page that will really help you. Read through the “Making a Plan” segment of the page, and you’ll be given the tools and instructions to best find your start in this journey. For more questions that you might have, reach out through our contact form, and we will be more than happy to guide you through this.

Student Loan Borrower FAQ

What do I do if I am a student loan borrower in default?

Here are some recommendations on what you can do if you’re in default:

• Figuring out a way to understand and remember your repayment schedule

• Find a new repayment plan that allows you to meet these deadlines, and also consider how much it will affect your wages and what you pay for 

• Budget long-term, and this is where a good plan comes in to keep you up to date with what you spend money on

The best place for a student loan borrower in default to contact to ask about their wages being garnished is the government’s Default Resolution Group. It’s a group in the Department of Education that manages and collects defaulted federal student loans. If you’re looking to contact them ASAP, read more about it here on the Federal Student Aid website!