Student Loan Update: Report Warns That Millions Could See Wage Garnishment
Summary
Millions of Americans who did not pay their federal student loans on time could have money taken directly from their paychecks starting in 2027. The government is planning to hire private debt collectors and might also take some tax refunds and Social Security benefits to recover these debts.Key Facts
- Nearly 10 million Americans are in default on their federal student loans.
- The government can take up to 15% of a borrower's wages without going to court.
- Borrowers usually receive a notice at least 30 days before wage garnishment begins.
- The Treasury Department is preparing to hire private debt collectors as early as November.
- Wage garnishment and benefit seizures could worsen financial problems for struggling borrowers.
- The government can also intercept federal tax refunds and some Social Security benefits.
- Debt collection measures were delayed multiple times but could resume soon.
- Borrowers can contest the debt or try to fix their default status before wage garnishment starts.
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