For four years, the Biden administration promised student loan borrowers a windfall of “free” money. Now, reality has slammed into millions of Americans.
Starting in January 2026, the Department of Education will begin garnishing wages of borrowers who defaulted on federal student loans.
Initially, about 1,000 borrowers will get notices informing them that up to 15% of their paychecks will be seized to repay delinquent loans.¹ This effort will ramp up over the following months as the Trump administration resumes collections paused during the COVID-19 pandemic.
More than 5 million Americans are already in default on federal loans, owing over $140 billion. Another 4 million are teetering on the edge of default, delinquent for 91 to 180 days. Nearly 10 million borrowers could fall into default soon, which would put roughly a quarter of the federal student loan portfolio in default.²
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