By Salma El-Sakka
The Trump administration is preparing to resume wage garnishments for federal student loan borrowers in default, ending a six-year pause on the practice. This move could impact approximately 9.3 million Americans who are at least 360 days behind on their loan payments, potentially resulting in funds being deducted directly from their paychecks.
Department of Education Actions
To facilitate this process, the Department of Education has decided to hire three debt collection agencies. However, the department stated that borrowers will receive ample warning via an "offset" notice. This notice will inform individuals that wage garnishment is imminent and establish a 65-day deadline before the deductions begin.
Options to Avoid Garnishment
Borrowers have several pathways to prevent or stop the garnishment process. One option is to move loans out of default by making nine consecutive monthly payments and opting into one of six repayment plans. Alternatively, making five rehabilitation payments can also end the garnishment process, provided the first payment is made within the 65-day deadline.
Another strategy is loan consolidation. By combining all federal student loans into a single direct consolidation loan, borrowers create a new loan that is not in default, effectively providing a fresh start. This must be completed within the 65-day window provided in the offset notice.
Filing Objections and Seeking Discharge
Borrowers may file a formal objection to wage garnishment under specific circumstances, such as being held responsible for a debt due to a mistake, undergoing bankruptcy proceedings, or being totally and permanently disabled. If an objection is approved, the garnishment may be reduced or stopped; if denied, the process will proceed.
In certain cases, borrowers may apply for a total discharge of their debt. This applies to individuals who are totally and permanently disabled, those whose schools closed while they were enrolled or shortly after withdrawing, or those who have qualified for specific programs like Public Service Loan Forgiveness. Additionally, the Department of Education offers payment arrangements that lower monthly costs to help borrowers make progress and delay garnishment, provided the first payment is made within the required timeframe.
