Hailey
Millions of Americans with student loan debt may soon feel extra pressure on their monthly income. The U.S. government has confirmed that it will restart wage garnishment from January 2026 for people who have not paid their federal student loans for a long time.
This means part of a borrower’s salary can be taken directly from their paycheck before they even receive it.
For many families already struggling with high rent, food prices, and utility bills, this move could make daily life even harder. After several years of payment relief during the pandemic, the government is now returning to strict collection rules.
If you or someone in your family has unpaid student loans, it is important to understand how this process works and what steps can be taken to avoid losing income.
Why Wage Garnishment Is Starting Again in 2026
The U.S. Department of Education has announced that wage garnishment will restart from the week of January 7, 2026. In the first stage, around 1,000 borrowers will receive official notices. Every month after that, more people will be added to the list.
Main Reasons Behind This Decision
The restart is happening because of two major changes:
- The five-year pause on student loan payments and penalties has officially ended
- A new law called the One Big Beautiful Bill Act has reduced the number of repayment plans
These changes have made it more difficult for many borrowers to keep up with payments, especially those who were already behind.
How Student Loan Wage Garnishment Works
When someone defaults on federal student loans, the government has strong legal powers. Unlike private debt, it does not need court approval to collect money.
What the Government Can Take
The government can collect unpaid loans by taking money from:
- Monthly wages
- Federal tax refunds
- Social Security benefits
- Disability payments
Before this happens, borrowers are sent notices and given time to respond. These actions are allowed under laws such as the Higher Education Act of 1965 and the Debt Collection Improvement Act of 1996.
How Much of Your Salary Can Be Taken
There are limits on how much money can be garnished. Under the Consumer Credit Protection Act, the government can take:
- Up to 25% of disposable income, or
- The amount by which weekly income is more than 30 times the federal minimum wage
Whichever amount is lower will apply. While this rule protects borrowers from losing all their income, even small deductions can be very painful for families living paycheck to paycheck.
How Many Borrowers Are at Risk
The number of people affected is very large.
Student Loan Default Numbers
| Category | Estimated Numbers |
|---|---|
| Borrowers in default | 5.3 million |
| Borrowers delinquent (90+ days late) | 5.4 million |
| Total federal student loan borrowers | 42.7 million |
| Total student loan debt | $1.6 trillion |
These numbers show that wage garnishment could impact millions of households across the country.
Concerns Raised by Borrower Advocates
Many borrower rights groups have strongly criticized the decision. Experts warn that wage garnishment often pushes people deeper into financial trouble instead of helping them recover.
Why Critics Are Worried
- Borrowers may struggle to pay rent, food, and electricity bills
- Garnishment can make it harder to return to normal payments
- Many people still face job instability and rising living costs
Advocates argue that restarting collections without enough affordable repayment options is unfair.
Fewer Repayment Options After New Law
Another big issue is the reduction in repayment choices. Earlier, borrowers could choose from five federal repayment plans. Now, only two plans remain.
The popular SAVE repayment plan, which had about 8 million users, is being phased out. This has left many borrowers confused and worried about whether they can afford the new options.
What Borrowers Should Do Right Now
If you are in default, do not ignore letters or emails from the Department of Education. Acting early can help stop wage garnishment.
Steps That May Help
- Check your loan status online
- Update your contact details
- Talk to your loan servicer
- Apply for loan rehabilitation or consolidation
- Enroll in a repayment plan if eligible
Taking action before January 2026 can protect your income.
The restart of student loan wage garnishment in January 2026 marks a difficult time for millions of Americans. After years of payment relief, borrowers now face stricter rules, fewer repayment plans, and the real risk of losing part of their salary.
While the government says the move is required by law, critics warn it could increase financial stress for families already struggling with high costs. Staying informed, checking loan status, and acting early are the best ways to avoid sudden wage deductions and protect household finances.
FAQs
When will wage garnishment for student loans start?
Wage garnishment is expected to begin from the week of January 7, 2026.
Who can face wage garnishment?
Borrowers who are in default on federal student loans are at risk.
Can wage garnishment be stopped?
Yes, by resuming payments, rehabilitating loans, or joining a repayment plan before garnishment begins.