Garnishing Wages for Student Loans Is On Hold: What Does It Mean for You

In 2020, the federal government paused collections efforts on defaulted federal student loans as part of COVID-19 relief efforts. While Congress said payments would start again in 2023, the pause remained in effect. This pause has now ended. 

The Trump Administration announced on April 21, 2025 that the Department of Education would start trying to collect on unpaid federal student loan debt on May 5. Unfortunately for the approximately 7.7 million borrowers currently in default on federal student loans, the government has many powers to collect money that private debt collectors don't.

Wage garnishment is one of those powers. Your loan servicer can order your employer to withhold up to 15% of your pay after mandatory deductions like Social Security. The servicer doesn’t need a court order to do this, but you’re entitled to 30 days' notice before garnishment starts. Along with wages, in some cases, people with defaulted federal student loans can even have their tax refunds and Social Security payments garnished by the government. 

Having money taken out of your paycheck or tax refund to pay for long-ago student loans isn’t a situation that anyone wants to be in. But the good news is you still have time to avoid garnishment. In January 2026, the U.S. Department of Education announced that it is delaying “involuntary collections” (including garnishment) for federal student loans. The Department of Education says it’s setting up new, easier-to-use affordable repayment plans to help borrowers who are in default. 

If you're in default and want to know about debt relief, you’ve got options to avoid having your wages, tax refunds, or other federal government payments garnished. Getting out of default is one strategy. Negotiating a payment plan is another.  

It’s important to keep in mind that just because the government has announced a delay doesn’t mean you’re safe from garnishment forever. Use this time to make some positive changes in your finances. 

Here's what you can do if you're in default and at risk of wage garnishment.

What Is Wage Garnishment, and How Does it Work?

Wage garnishment happens when your employer is ordered to withhold part of your paycheck. In the case of federal student loans, your loan servicer can order your employer to withhold up to 15% of your disposable pay (what you earn after taxes are taken out). 

Your student loan servicer doesn't have to go to court to get a garnishment order. It's different from when a private lender wants the court to take money from your bank account or paycheck. 

However, your servicer needs to do a few things before garnishment starts. You're entitled to 30 days' notice, for example. The notice must explain your rights to challenge the garnishment order or explore alternatives. 

If you’re in default on your federal student loans, it’s important to understand how to protect yourself from garnishment. If you aren't sure if you're in default, visit StudentAid.gov and log into your account. Your dashboard will show the amount you owe and your loan status. If it says "default," you may be at risk of having wages withheld when garnishment resumes. You should also see a warning at the top of the page. 

What if Your Wages Are Garnished?

If the Department of Education garnishes your wages, you have a few alternatives, including getting out of default. You could also explore other ways to avoid having your pay withheld.

Getting out of default

There are three ways to get out of default:

• Pay your loan balance in full. This is rarely practical—most people don't have the ready cash to pay off their loans. 

• Loan rehabilitation. To rehabilitate your loan, or bring it back into good standing, you must agree in writing to make nine voluntary payments within 20 days of your due date. Your loan servicer will set reasonable and affordable payments. You must make all nine promised payments over 10 months. Loan rehabilitation could give you a monthly payment as low as $5, based on your income. Until recently, loan rehabilitation was a one-time opportunity—if you’d already rehabilitated a loan and then defaulted on it again, you would have been required to find a different option. But as of January 2026, recent changes in federal law are giving borrowers a second chance to use loan rehabilitation.  

• Loan consolidation. You can get out of default if you consolidate a defaulted federal loan into a new Direct Consolidation Loan. You must agree to repay the Direct Consolidation Loan under an income-driven plan. Or, you must make three consecutive voluntary, on-time, full monthly payments on the defaulted loan before you consolidate. 

If you have already defaulted on a Direct Consolidation Loan, you can consolidate it again if you have at least one other eligible loan to consolidate with the defaulted one. 

Both loan rehabilitation and loan consolidation are usually good options. Remember that Direct Consolidation Loans are a special kind of consolidation loan. They are only available through the Department of Education. 

Direct Consolidation loans are not the same as a debt consolidation loan from a private lender. Borrowing from a private lender isn't always a good strategy for getting out of default, because you may not qualify. You'd also lose federal borrower benefits.

Other ways to avoid withholding

There are also other ways to avoid wage garnishment without getting out of default. You could:

• Negotiate a loan repayment. If you come to a voluntary agreement to pay your debt, you could avoid wage garnishment. You must get the lender to agree to the terms. You also must make your first payment no later than 30 days from the date you got the notice of garnishment. 

• Request a hearing. You can request a hearing to question if the debt is valid. You can also request a hearing to object to garnishment because it would cause extreme financial hardship. Finally, you could argue that garnishment can't be used because you've been working for your employer for less than 12 months after you were involuntarily separated from a previous job.

If you're hoping to avoid garnishment through a hearing, you must make your request in writing. You must postmark it no more than 30 days from getting your notice of default. You also need proof of your objections, or proof of extreme financial hardship or a short employment history. 

Avoid Wage Garnishment

If you’re at risk of garnishment, don’t assume that the federal government’s delay on involuntary collections is going to last forever. Explore ways to avoid garnishment ASAP. Here are some strategies to consider. 

Sign up for income-driven payment plans 

Income-driven repayment (IDR) plans that cap your monthly payments at a percentage of your income are available for federal student loans. The rules about income-driven plans are changing, and some income-driven plan options are on hold for now. You can still sign up for a plan, though. In some cases, an IDR could reduce your payment to $0 per month.

Contact your loan servicer to find out about income-driven plans. You can also see the latest choices and apply online at the Department of Education’s website. 

Watch for new income-driven repayment plan in July 2026

As of January 2026, the Department of Education says it is working on a new, simplified income-driven repayment plan, which should be available for borrowers starting July 1, 2026. This new income-driven repayment plan is supposed to offer some extra help for borrowers who qualify, such as: 

• Waiving unpaid interest for some borrowers with on-time payments whose loan payments do not fully cover the accrued interest.

• Small matching payments from the U.S. Department of Education for some borrowers to help make sure that their outstanding principal is reduced each month.

Whether you choose an existing income-driven repayment plan or want to use the new plan available in July 2026, it’s important to know that the U.S. Department of Education wants to work with you on your defaulted federal student loans. There are options available to help you make your payments more affordable and get your loans back in good standing. Check the StudentAid.gov website to understand your options as the situation might change. 

Put your loans into deferment or forbearance 

If you're not in default yet, you could pause payments by putting your loans into deferment or forbearance to avoid default. Deferment allows you to avoid interest on Direct Subsidized Loans during the deferment. Interest is charged on all loans during forbearance. 

Under some circumstances, your loan servicer must allow you to pause payments using one of these two methods. In other situations, your loan servicer might or might not allow you to do so. Contact your loan servicer to find out whether you’re eligible. 

Settle other debts 

If you have unsecured debt aside from your student loans, debt settlement could help you free up more money in your monthly budget to pay your student loans. When you settle debt, your lender agrees to accept less than the full amount you owe, but consider it payment in full. Getting rid of other personal debt, like credit card debt, won’t directly pay for your student loan debt, but it could provide the financial relief you need. 

Sometimes getting professional debt relief help can give you more momentum. Figuring out how to fix defaulted student loans isn’t just about that one debt. This could be a moment of opportunity to improve your personal finances in bigger ways, and get your financial life on track for a brighter future. 

You can negotiate with your creditors yourself, or a debt settlement company could negotiate on your behalf. Learn how Freedom Debt Relief works to see if this strategy is right for you.   

People just like you are seeking debt relief in Los Angeles, CA and across the country. The first step is the most important one—explore your options.

Consider bankruptcy 

Student loans usually can't be discharged in bankruptcy. However, eliminating other debt through a bankruptcy filing could free up more money in your budget to help you get current on your student loans and avoid garnishment. 

Talk to an attorney if you’re thinking about filing bankruptcy. A bankruptcy attorney in your state can help you understand your choices and see what might be the best fit.  

This article is for informational purposes only. For personalized legal advice, consult with a qualified attorney licensed to practice law in your state.

Whichever approach you take to avoid wage garnishment for federal student loans, the key is to act quickly. If you're in default on federal student loans, you need to make a plan for how to fix the situation. If not, you’re at risk of the government taking some of your money that you work hard to earn.