Falling behind on your student loan payments? Your paycheck might be taking a hit.

Federal Government Resumes Student Loan Collections

After a prolonged period of uncertainty, the federal government has restarted the process of garnishing wages and withholding benefits from individuals with outstanding student loans.

Recent actions by the Trump administration have narrowed repayment options and intensified collection efforts following the end of the COVID-related pause. In December 2025, the Department of Education proposed a legal settlement to eliminate the Saving on a Valuable Education (SAVE) plan, effectively ending the Biden administration’s initiatives to ease or forgive $200 billion in student loan debt for 5 million federal borrowers.

Since June 2024, over 7 million borrowers enrolled in the SAVE plan have not been required to make payments due to administrative forbearance. However, interest began accruing again in August 2025, and the government announced that wage garnishment for those behind on payments would resume starting January 7, according to reports.

Here’s what you need to know about who may be affected by these renewed collection efforts.

USA TODAY has contacted the Department of Education for further information.

Consequences of Missing Student Loan Payments

Missing a payment on your federal student loans does not immediately place you in default. According to the Federal Student Aid Office (FSA), your loan is considered delinquent the day after a payment is missed, which may result in late fees or negative impacts on your credit score.

If payments are not made for an extended period, your loan can enter default status. At that point, the government is authorized to collect the debt involuntarily by taking funds directly from your paycheck, tax refund, or other federal benefits.

The federal government officially resumed wage garnishment and benefit withholding for student loan borrowers as of January 7, following years of legal delays.

Understanding Wage Garnishment

Wage garnishment is a legal mechanism that allows creditors to collect debts by deducting money directly from an employee’s paycheck. Employers are responsible for forwarding these funds to the appropriate creditors, typically after receiving a court order or legal notice.

Wage garnishment can be used to collect debts such as child support, student loans, credit card balances, bankruptcy judgments, or unpaid taxes. Employers who fail to comply with garnishment orders may face significant fines or legal consequences.

The amount withheld from each paycheck depends on the type of debt and is governed by both state and federal regulations. Garnishment ends once the debt is paid in full, the order is lifted, or the designated time period expires.

The Treasury Offset Program: How It Works

The Treasury Offset Program is a centralized system used by the government to collect debts owed to federal and state agencies, including overdue child support and defaulted loans.

Through this program, the government can intercept tax refunds or other federal payments, such as Social Security benefits, to recover outstanding debts.

Who Faces Involuntary Student Loan Collections?

Only borrowers whose student loans are in default are subject to wage garnishment or other forms of involuntary collection.

Federal student loans are considered in default after 270 days of missed payments. At this stage, the Department of Education’s Default Resolution Group (DRG) will send a notice detailing the amount owed and outlining options for resolving the default, such as applying for relief, setting up a reduced payment plan, or requesting a hearing, according to the FSA.

If no action is taken for more than 360 days, the government can begin garnishing wages or recovering the debt by other means, without needing a court order. If the Treasury Offset Program is used, you will receive a mailed notice from the U.S. Department of the Treasury at least 65 days before any funds are withheld.

For federal student loans, the government may take up to 15% of your paycheck, seize your entire tax refund, and withhold up to 25% of your Social Security benefits. Learn more here.

Adapted from USA TODAY: Student loan borrowers could see wages garnished starting this week