Wage Garnishment Looms for Millions of Student Loan Borrowers!

2025-08-03 00:00:38.985

Millions of student loan borrowers could see their wages garnished as early as this summer, according to TransUnion. The credit bureau estimates that by August, approximately 3 million borrowers could default on their loans, leading to the government withholding 15% of their pay. Another 2 million are projected to default by September. The Biden administration's grace period, which shielded borrowers from negative credit impacts, ended in the fall, resulting in millions experiencing credit score damage. Experts advise borrowers to check their student loan status on studentaid.gov and explore options like rehabilitation agreements or loan consolidation to avoid default. Long wait times for contacting loan servicers are reported, and contacting your congressperson is suggested as an alternative. If a borrower defaults, up to 15% of their wages can be garnished. The Department of Education has sent warnings, but hasn't specified a start date for garnishments. Borrowers facing garnishment can request a hearing to object, citing financial hardship or other reasons, within 30 days of receiving the garnishment order. Reasons for objecting include recent job loss, pending statutory discharge applications (due to school closure, unpaid refunds, disability, or bankruptcy). A hearing request may prevent garnishment, but only if made within 30 days. Requests made after the 30-day period will likely not stop the garnishment.