Student Loan Borrowers Face Wage and Benefit Garnishments as Collections Resume

Following a five-year pause, the Trump administration announced on April 21 the resumption of collection efforts on defaulted federal student loans, including wage garnishment, tax refund seizures, and reductions to Social Security benefits.

The move affects over 5 million borrowers currently in default, with the U.S. Department of Education projecting that number could double in the coming months. “Borrowers should pay back the debts they take on,” said U.S. Secretary of Education Linda McMahon in a video statement on April 22.

Loan agreement | Source: Pexels

Among those impacted is Jason Collier, a special education teacher in Virginia. “Money is tight when you’re a teacher,” said Collier, who fears losing up to 15% of his wages due to default. “If I need a car repair, or something comes up, I might not be able to do those things.”

Marceline Paul, a 68-year-old retiree in Maryland, expressed alarm after receiving a notice that her Social Security benefits could be garnished. “When I saw that email, it made me sick to my stomach,” said Paul, who relies on her $2,600 monthly benefit and has no room in her budget for further cuts. “I’ve paid into the system and I should be able to retire.”

Pen and sheet of paper in hands | Source: Pexels

Many borrowers report difficulty reaching loan servicers due to staffing cuts and system confusion. Kia Brown, a management analyst at the Department of Veterans Affairs, said she faced hours-long hold times and conflicting information regarding her loan servicer. “The narrative is that people are dodging their payments,” Brown said. “I truly believe many people will be blindsided due to lack of guidance.”