Millions of Americans with student loans are entering a difficult financial period as the federal government officially restarts aggressive collection actions. Starting this week, the Department of Education is moving forward with plans to garnish wages from borrowers who have fallen into default. This change comes after years of pandemic era relief and signals a major shift in federal debt collection policy under the current administration.
While the government maintains that these steps are legally required to manage the national debt, many advocacy groups worry about the impact on families already facing high costs of living. If you have unpaid federal student loans, it is essential to understand how these new rules work and what you can do to protect your income.
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Why the Government is Restarting Wage Garnishment
The decision to resume collections follows the end of a five year pause on student loan repayments and penalties. During the pandemic, the government stopped taking money from paychecks to help people cope with the global health crisis. However, those protections have now fully expired.
A major driver behind this restart is the One Big Beautiful Bill Act. This legislation has changed the landscape of student debt by reducing the number of available repayment plans and ending the previous SAVE plan. Officials argue that restarting collections is necessary to maintain fiscal discipline and ensure that the student loan system remains sustainable for future generations.
How the Garnishment Process Works
When a borrower is in default on a federal student loan, the government does not need a court order to take money from a paycheck. This is known as administrative wage garnishment. The Department of Education simply notifies the employer to withhold a specific portion of the employee’s earnings.
The government can also collect funds through other methods. This includes taking money from federal tax refunds or seizing a portion of Social Security and disability payments. These actions are permitted under long standing laws like the Higher Education Act of 1965 and the Debt Collection Improvement Act of 1996.
Understanding the Limits on Your Salary
There are legal protections in place to ensure that borrowers are not left with nothing. Federal law limits the amount that can be taken from your weekly pay. Generally, the government can garnish up to 15% of your disposable income.
| Collection Method | Maximum Amount Taken | Other Assets Affected |
| Wage Garnishment | 15% of disposable pay | Weekly paychecks |
| Tax Offset | 100% of federal refund | Yearly tax returns |
| Benefit Offset | 15% of monthly benefit | Social Security / Disability |
| Treasury Offset | Varies by debt type | Other federal payments |
Disposable income is the amount left after legally required deductions like taxes are taken out. Furthermore, federal rules state that a borrower must be left with a minimum amount of weekly income, which is usually 30 times the federal minimum wage.
Critical Steps for Borrowers in Default
If you are currently in default, you should not wait for a notice to arrive in the mail. The Department of Education has started sending notices to the first group of 1,000 borrowers, and this number will grow every month throughout 2026. Taking action early is the best way to stop the garnishment process before it starts.
You can protect your paycheck by considering the following options:
- Contact your loan servicer immediately to check your current status.
- Enter into a loan rehabilitation program by making nine on time payments.
- Apply for loan consolidation to combine your debts into a new, manageable loan.
- Request a formal hearing if you believe the debt amount is incorrect.
- File for a hardship waiver if garnishment would prevent you from paying for basic needs like food or rent.
Fewer Choices for Repayment Plans
One of the biggest challenges for borrowers in 2026 is the reduction in repayment options. Under the One Big Beautiful Bill Act, the federal government has cut the number of available repayment plans from five down to only two. This has caused confusion for many people who were previously enrolled in the SAVE plan or other income driven programs.
With fewer plans to choose from, it is more important than ever to speak with a professional or use the official government tools at StudentAid.gov. Staying informed about your specific plan will help you stay in good standing and avoid the risk of having your wages taken.
