The U.S. Department of Education is expected to begin garnishing wages to pay for defaulted student loans in the coming weeks.
This move could affect millions who are 270 days or more past due, and have major ramifications for Black borrowers. Due to ongoing racial inequality, Black students aren’t only more likely to rely on loans to make college affordable. They’re also more likely to struggle to pay back their loans once they enter the workforce.
The agency’s December announcement that it would begin seizing the pay of defaulted borrowers was the latest shock to the education landscape.
Last November, the Trump administration announced that it was relocating certain responsibilities and programs — including those that support low-income districts and historically Black colleges and universities — out of the Education Department to “break up the federal education bureaucracy.”
And last July, the U.S. Supreme Court allowed the mass firings at the agency to continue, though the issue is still being litigated in the lower courts. Black workers are overrepresented among federal workers and, as a result, have been disproportionately affected by the cuts.
The agency said that it would send out the first batch of garnishment notices to approximately 1,000 borrowers this week, with the number of notices increasing in size every month.
Here’s what you need to know if your student loans are in default.
When will wage garnishment start?
The department must send borrowers a 30-day notice before it can begin garnishing their paychecks. These notices cover how borrowers can address their defaulted loans and seek a hearing to dispute the decision to seize pay.
How much of my paycheck can the government garnish for student loans?
The government can garnish as much as 15% of a borrower’s disposable wages.
What repayment plans are available to avoid default?
Borrowers who aren’t in default but might be delinquent can avoid defaulting on their loans by participating in a repayment option.
There are several income-driven repayment plans available, including Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE). Deferment or forbearance may also be possible in some circumstances.
Stanley Tate, an attorney specializing in student loan law, told Capital B that a common theme he has observed is that many borrowers default not because no options exist — but because they’re unaware of which plans they qualify for and how they might enroll in them.
Is there legislation to stop or suspend wage garnishment?
At the moment, there’s no legislation that would broadly stop or suspend federal student loan wage garnishment, according to Tate.
What happens if I don’t respond to a garnishment notice?
Garnishment occurs if a defaulted borrower does nothing. Employers will withhold up to 15% of a borrower’s paycheck. That money is sent to the government. Borrowers are legally required to retain at least 30 times the federal minimum hourly wage per week, or $217.50.
What rights do borrowers have when facing garnishment?
Borrowers must be notified 30 days before garnishment begins. Additionally, they have the right to request a hearing and to pursue options such as consolidation or rehabilitation to resolve the default, Tate said.
“From a practical standpoint,” he added, “the key right is the ability to stop garnishment by exiting default before wage withholding starts.”
How will garnishment impact economic stability for borrowers?
Especially for lower-income borrowers, a 15% wage garnishment is significant. It could have a large impact on their ability to pay for rent, transportation, child care, health care, and other needs, Tate said.
He noted that what makes this period particularly difficult is that many of these same borrowers could qualify for income-driven repayment plans that require a much smaller payment — sometimes well below what would be taken through garnishment.
“In that sense,” Tate said, “garnishment often reflects a breakdown in communication and access rather than a lack of repayment options.”