Wage Garnishment Resumes for 5.5 Million Defaulted Student Loan Borrowers in 2026

Washington, Wednesday, 24 December 2025.
Effective January 2026, the Department of Education will end the five-year pandemic-era moratorium on involuntary collections, initiating wage garnishment for approximately 5.5 million student loan borrowers currently in default. The administration confirmed that notices will begin circulating the week of January 7, signaling a return to strict fiscal enforcement that allows the government to seize up to 15% of a borrower’s disposable pay. This policy shift targets a vulnerable demographic—data indicates that 1 in 4 federal borrowers are currently delinquent or in default. Analysts warn that this sudden reduction in disposable income, coinciding with anticipated healthcare cost increases, creates a compounded financial strain that is likely to dampen consumer spending throughout the first quarter.