Summary
President Trump's administration plans to start taking money directly from the paychecks of people who haven't paid their student loans. This action will begin the week of January 7 and is a part of resuming collections after a five-year pause. The Department of Education will begin notifying around 1,000 borrowers who are in default about this wage garnishment.
Key Facts
- The Trump administration will start garnishing wages from defaulted student loan borrowers starting the week of January 7.
- About 1,000 borrowers will initially receive notices, and the number will increase every month.
- This action follows the end of a five-year repayment pause that affected 5.3 million borrowers.
- President Trump signed a law in July that reduces the number of student loan repayment plans from five to two.
- The U.S. government can also take federal tax refunds, Social Security, and disability benefits from borrowers who are in default.
- Student loan collections follow laws from the Higher Education Act of 1965 and the Debt Collection Improvement Act of 1996.
- The Consumer Credit Protection Act limits garnishment to a maximum of 25% of disposable earnings or the amount over 30 times the federal minimum wage.
- There are 42.7 million borrowers with over $1.6 trillion in federal student debt.
