Wage garnishment shock: When will student loan collections resume? No one knows

The U.S. Department of Education said one year ago that collections on defaulted student loans would restart, but it has still not fully done it. Federal student loan borrowers have not faced regular collections since before the COVID-19 pandemic, meaning many people have not had wages taken for years. Normally, if a borrower misses payments for more than 270 days, the loan goes into default and part of their wages or government benefits can be taken.

Around 8.8 million federal student loan borrowers are currently in default, and millions more are behind on payments. These borrowers still have time to fix their loans before wage garnishments restart, which is important because garnishments make it harder to pay bills or other debts, according to Investopedia. The Education Department first said in May 2025 that it would resume collections, but it later changed its position several times.

Student loan default risk

In December, the department said wage garnishments would restart in early 2026, but less than a month later it pulled back that statement. Officials said the delay would allow more time to introduce changes under the “One Big Beautiful Bill,” including a new income-driven repayment plan called the Repayment Assistance Plan starting July 1, 2026, as cited by Investopedia. “These are new tools… available July 1,” said Nicholas Kent at a Brookings Institution event on March 19, adding the pause is temporary.

Treasury to start collections

On the same day, the Education Department said student loan responsibilities would shift to the U.S. Department of the Treasury, which plans to resume collections on defaulted debt. Scott Buchanan from the Student Loan Servicing Alliance said the Treasury will start with voluntary collections, meaning borrowers will be contacted to discuss options like rehabilitation or consolidation, as noted by Investopedia.

Buchanan said the Treasury plans outbound calls to borrowers in default, which did not happen under the previous administration. Voluntary collections may begin in about four to five months, but no one knows when involuntary collections like wage garnishments will actually start. It is also unclear if Social Security benefits will be included in garnishments, and neither the Education Department nor the Treasury gave a timeline for when involuntary collections will resume.

FAQs

Q1. When will student loan wage garnishment start again?

There is no exact date yet, as the U.S. Department of Education and U.S. Department of the Treasury have not given a timeline.

Q2. Will borrowers be contacted before collections begin?

Yes, voluntary collections like calls and outreach may start first to help borrowers fix defaulted loans.