WASHINGTON (AP) — Starting early next year, the Trump administration plans to garnish wages for student loan borrowers in default. The Department of Education will notify about 1,000 borrowers the week of January 7, with more notices following each month.
Currently, millions of borrowers are in default, which means they are 270 days overdue on payments. Borrowers will receive a 30-day notice before any wages can be garnished. The administration claims it will only begin collection after giving sufficient notice and chances to repay.
In May, the pause on student loan payments during the pandemic ended. This allows the collection on defaulted loans through withholding tax refunds and other federal payments. Since March 2020, no federal student loans were sent to collections, marking a significant shift with the Trump administration’s announcement earlier this year.
While the Biden administration extended a grace period for payments, efforts to provide broad loan forgiveness have stalled in court.
Persis Yu, deputy executive director of the Student Borrower Protection Center, criticized this wage garnishment plan. She pointed out that many families struggle with stagnant wages and high living costs. “This administration’s decision to garnish wages is cruel and irresponsible,” Yu stated. She emphasized that instead of seizing wages, the government should prioritize affordable payment options for borrowers.
According to a recent survey by the Student Loan Borrower Protection Center, 70% of borrowers express concern about repaying their loans amid rising costs of living, highlighting the urgency of finding effective solutions.
In times past, during the financial crisis of 2008, similar measures led to significant backlash from borrowers and policymakers alike. Today, many believe that easing payments rather than punitive measures may foster better financial health in the long run.
As the landscape of student loans evolves, understanding these changes and their implications becomes crucial for borrowers and the broader society.
For more insights on student loans, visit the Department of Education or check resources from the Student Borrower Protection Center.
