Student loan borrowers at risk of wage garnishment in January
US President Donald Trump announced the creation of the “Trump-class” warship in a statement to the press at Trump’s Mar-a-Lago mansion in Palm Beach, Florida, on December 22, 2025.
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The Trump administration will begin garnishing the wages of defaulting student loan borrowers in early January, a U.S. Department of Education spokesperson confirmed to CNBC on Tuesday.
This will be the first time some of debtors’ paychecks will be at risk since the beginning of the Covid pandemic, when collection activity was halted.
The U.S. government has extraordinary collection powers over federal debts and can seize debtors’ federal tax refunds. feesAnd Social Security retirement and disability benefits.
The Department of Education can seize up to 15% of a student loan holder’s after-tax income to put toward the debt.
Student loan holders are under pressure due to a weakening labor market, changes to the credit system and, more recently, problems accessing aid programs. The Department of Education says more than 5 million student loan borrowers are currently in default, and that total could soon rise to nearly 10 million borrowers in question earlier this year.
More than 42 million Americans have student loans and outstanding debt $1.6 trillion.
This is developing news. Please check back for updates.
