Summary
Starting in January 2026, Americans with federal student loans will see changes to how their debt is managed. The U.S. government will resume collecting overdue loan payments directly from paychecks and some loan forgiveness will become taxable again.
Key Facts
- Wage garnishments for overdue federal student loans will resume in January 2026.
- Federal student loan default occurs if no payment is made for 270 days.
- Over 5 million borrowers are in default as of early 2025.
- Federal law requires a 30-day notice before wage garnishment starts.
- Starting January 1, 2026, loan forgiveness under income-driven plans will be taxable.
- The American Rescue Plan's tax exclusion for forgiven loans ends in 2025.
- Public Service Loan Forgiveness will stay tax-free.
