What is student loan wage garnishment?

Student loan wage garnishment is when the government orders your employer to withhold part of your paycheck to repay defaulted federal student loans. It is administrative, so no court order is required. The amount is based on disposable pay and federal limits, with hardship options available.

When will garnishments resume and how many notices go out first?

The Education Department plans to restart collections the week of January 7, 2026. About 1,000 initial wage garnishment notices will go out, with a ramp-up to follow as more defaulted accounts move through the process, according to recent reports from national outlets.

How much of my paycheck can be taken, and do courts approve it?

For federal student loans, up to 15% of your disposable pay can be withheld through administrative wage garnishment. Courts do not need to approve it. You must receive notice and have a chance to review, object, or set up a payment plan before deductions begin.

How can I stop or reduce a garnishment?

Act fast after a notice. Contact the servicer or collector to request a review, show hardship, and ask for a smaller amount. Entering rehabilitation, consolidating, or choosing an income-driven plan can cure student loan default and pause or remove student loan wage garnishment.

Global Market Insights

December 23: Wage Garnishment Returns for Defaulted Student Loans in Jan

ByHuzaifa Zahoor December 24, 2025December 24, 2025

Student loan wage garnishment will restart the week of January 7, 2026. The Education Department plans about 1,000 initial notices, then a ramp-up. For households in student loan default, a slice of take-home pay can be withheld, tightening monthly budgets. We expect a near-term drag on discretionary spending and a small lift to federal recoveries. Investors should watch consumer trends, credit metrics, and lender commentary as garnishments resume. Below we outline the timeline, mechanics, spending impact, credit risks, and practical steps borrowers and employers can take now.