Trump Student Loan Row: 1,000 Borrowers Warned of Wage Garnishments in January

Five years of pandemic-era relief come to an abrupt end this month. Starting the week of January 7, the Trump administration will begin a sweeping wage garnishment campaign targeting an estimated 5.5 million Americans who have defaulted on their federal student loans – the first such enforcement action since March 2020, when the government paused collections amid the coronavirus crisis.

Approximately 1,000 borrowers will receive initial notices during the week of January 7, with the volume of garnishment notifications expected to increase substantially on a monthly basis throughout 2026, according to the Department of Education. For struggling families already living paycheque to paycheque, this represents a staggering financial blow.​

The move marks the culmination of what began in May 2025 when the Trump administration resumed collecting defaulted debt through tax refund withholding and other federal payment offsets.

Now, the government will move beyond administrative garnishment to direct wage seizure – meaning employers will be instructed to deduct up to 15 per cent of borrowers' paychecks and remit the funds directly to the Department of Education.

This is a form of debt collection that operates entirely outside the court system, making it far more aggressive than typical commercial litigation.​

Student Loan Wage Garnishment: The Enforcement Action That Bypasses Courts

Charleston, West Virginia bankruptcy attorney Emmett Pepper outlined the stark reality facing defaulted borrowers. 'Unlike other wage garnishments people may be familiar with, if somebody – just a regular company – sues you, they have to go through the court system. They have to wait for time to lapse for appeals and all that stuff,' he explained. 'They don't have to do this.'​

Borrowers are considered in default once they have missed payments for 270 days or more – approximately nine months without payment. The Department of Education is required to provide at least 30 days' written notice before any garnishment can commence, but once that window closes, the government can seize wages without further court involvement.

Pepper emphasised the gravity of the situation: 'Go on studentaid.gov and check to see if they are in default. Also make sure that they have their contact information updated. If there is something that you need to hear from the federal government on this, that they will get it. I guess the third thing is open all your mail. Open your mail.'​​

The financial implications are severe. Whilst the Department of Education can garnish up to 15 per cent of disposable income, experts note that the actual garnishment amount will vary based on individual income levels – meaning some borrowers will pay significantly more than others.

For low-wage workers already struggling with inadequate income, even a 15 per cent reduction could push families below the poverty line.​

Defaulted Student Loans in 2026: Why West Virginia and Other States Face Particular Hardship

West Virginia faces acute vulnerability to this policy shift. According to the Education Data Initiative, $7.4 billion in student debt belongs to West Virginia residents, with nearly half of those borrowers under age 35.

For a state already grappling with economic challenges and population decline, the mass garnishment of young workers' wages represents a potential economic contraction precisely when growth is desperately needed.​

Pepper expressed serious concern for struggling families: 'The main thing I'm concerned about is that people are aware of their situation and are proactive about it. Because there are things that you can do. You can essentially appeal it. You can work to get out of default in ways that are different from necessarily garnishment.'

Yet he also sounded a warning of profound consequence: 'This is not a situation where you can put your head in the sand.'​

Pathways Out of Wage Garnishment: Loan Rehabilitation and Consolidation Options

For borrowers facing imminent garnishment, legal remedies do exist – though they require urgent action. Borrowers can establish a loan rehabilitation payment plan, which requires making nine voluntary, reasonable and affordable monthly payments over ten consecutive months to exit default status.

Alternatively, borrowers can consolidate their loans through the Department of Education's Direct Consolidation Loan programme, which pays off each loan balance and replaces it with a single consolidated loan requiring repayment through an income-driven plan based on current income rather than a fixed amount.​

Critically, loans already subject to wage garnishment cannot be consolidated – meaning borrowers must act before garnishment begins. Those who make three consecutive voluntary payments on a defaulted loan gain eligibility to consolidate and select any repayment plan they wish.​

Pepper urged Congress to reconsider: 'I really do hope that Congress thinks about this and makes some changes that are going to make sense for the 21st century.' The administration's approach, he suggested, punishes those already struggling whilst offering limited assistance for genuine hardship cases.​

For millions of Americans, the choice is stark: proactively engage with their loan servicers, explore repayment alternatives, or face immediate wage reduction beginning in weeks. The era of pandemic-era forbearance has definitively ended.