Trump administration will start to garnish wages for defaulted student loans
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.
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