Borrowers in default on student loans could face wage garnishments as early as January.
According to published reports in the New York Times, the U.S. Department of Education indicated it would send notices of wage garnishments to 1,000 borrowers in default in early January. More notices will follow in the following months.
Loans are in default if payments are not made for at least 270 days. Up to 15 percent of pay may be garnished to collect the defaulted debt. Along with the garnishment of wages, federal income tax refunds and Social Security benefits may be withheld.
The COVID-era federal forbearance on student loans ended in October 2024, resuming the reporting of delinquencies.
The U.S. Department of Education reported in April 2025 that more than 5 million borrowers were in default.
According to FICO, more than 2 million student loan borrowers had a delinquency added to their credit by the end of the first quarter of 2025. That number grew to 6.1 million by April, according to the Fall FICO Score Credit Insights. FICO also disclosed that another 1.9 million still haven’t made a payment since October 2024, but a delinquency has yet to be reported.
TransUnion, one of the U.S. three major credit reporting agencies, reported that 29 percent of federal student loan borrowers were more than 90 days late on payments as of July.
