Education Department Set to Start Wage Garnishment for Borrowers in Default on Student Loans
The Treasury Offset Program, which is a federal initiative for recovering debts through the garnishment of federal and state payments, will handle the collection process.
TroibNews 
The Trump administration announced on Monday that it will initiate the process of collecting on defaulted federal student loans starting May 5.
The collections will be managed by the Treasury Offset Program, which recoups debts by intercepting payments such as tax refunds and Social Security benefits.
After a mandatory 30-day notice to borrowers, wage garnishment will commence later this summer, according to a senior Education Department official during a call with reporters.
In context, it’s important to note that no federal student loan has been sent to collections since March 2020, when the Education Department suspended federal student loan payments and collections amid the Covid-19 pandemic.
By the end of 2024, approximately 5.6 million borrowers were in default. Most federal student loan borrowers typically enter default after failing to make a payment for more than 270 days.
As for the current situation, only 4 out of 10 borrowers are up to date on their student loans, as reported by Education Department officials on Monday. Additionally, 35 percent of borrowers are 60 days delinquent, and about 4 million are 91 to 180 days delinquent.
Borrowers in default risk losing eligibility for further federal student aid and may face legal repercussions.
Looking ahead, department officials stated they will implement a “robust communication strategy,” which includes sending a series of emails to defaulted borrowers to inform them about the Treasury Offset Program and to encourage them to explore various repayment options.
Borrowers will be urged to enroll in income-driven repayment plans or to participate in loan rehabilitation—an option that requires making a specified number of consecutive, on-time payments to exit default, among other alternatives.
The department has made several resources available to borrowers, including an artificial intelligence assistant to aid in locating a repayment program, and extended call center hours for loan servicers.
The agency has indicated that it aims to collaborate with Washington to help borrowers escape default.
“We’re looking forward to working with Congress on their efforts to streamline loan repayment as well as lowering college costs,” a senior official stated. “And you’ll hear a lot about this over the next few weeks."
Lucas Dupont for TROIB News
The collections will be managed by the Treasury Offset Program, which recoups debts by intercepting payments such as tax refunds and Social Security benefits.
After a mandatory 30-day notice to borrowers, wage garnishment will commence later this summer, according to a senior Education Department official during a call with reporters.
In context, it’s important to note that no federal student loan has been sent to collections since March 2020, when the Education Department suspended federal student loan payments and collections amid the Covid-19 pandemic.
By the end of 2024, approximately 5.6 million borrowers were in default. Most federal student loan borrowers typically enter default after failing to make a payment for more than 270 days.
As for the current situation, only 4 out of 10 borrowers are up to date on their student loans, as reported by Education Department officials on Monday. Additionally, 35 percent of borrowers are 60 days delinquent, and about 4 million are 91 to 180 days delinquent.
Borrowers in default risk losing eligibility for further federal student aid and may face legal repercussions.
Looking ahead, department officials stated they will implement a “robust communication strategy,” which includes sending a series of emails to defaulted borrowers to inform them about the Treasury Offset Program and to encourage them to explore various repayment options.
Borrowers will be urged to enroll in income-driven repayment plans or to participate in loan rehabilitation—an option that requires making a specified number of consecutive, on-time payments to exit default, among other alternatives.
The department has made several resources available to borrowers, including an artificial intelligence assistant to aid in locating a repayment program, and extended call center hours for loan servicers.
The agency has indicated that it aims to collaborate with Washington to help borrowers escape default.
“We’re looking forward to working with Congress on their efforts to streamline loan repayment as well as lowering college costs,” a senior official stated. “And you’ll hear a lot about this over the next few weeks."
Lucas Dupont for TROIB News
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