Federal Student Loan Wage Garnishment Starts Today: What Borrowers in Default Should Do

As of January 7, federal student loan borrowers in default may begin experiencing wage garnishment, meaning part of their paycheck can be taken to repay student loan debt. For many borrowers, the first warning sign is a smaller paycheck, not a letter in the mail.

If you notice missing wages and have defaulted federal student loans, this may be administrative wage garnishment, which does not require a court order and can begin quickly once collections resume.

How Much Can Be Garnished for Student Loans?

The government can garnish up to 15% of your disposable income for defaulted federal student loans. This can make it difficult to keep up with rent, utilities, food, and other essential expenses.

Tax Refund Seizures Are Also Resuming

With tax season approaching, borrowers in default also face the risk of tax refund seizure through the Treasury Offset Program. This means your federal tax refund could be partially or fully taken to cover student loan debt, even before you receive it.

For borrowers who rely on their refund to catch up financially, this can create serious hardship.

What Borrowers Should Do Right Now

If your paycheck is already being garnished or you believe it may start soon:

• Do not ignore it

• Do not wait for the situation to fix itself

• Take action as soon as possible

There are federal programs that may help stop or prevent continued wage garnishment, depending on your loan status and eligibility.

How Smart Loan Aid Can Help

Smart Loan Aid helps borrowers review their federal student loan situation, identify available options, and take steps toward resolving default and stopping collections when possible. Acting quickly can help protect your income and reduce further financial damage.

Take Action Before More Income Is Taken

Wage garnishment and tax refund seizures can severely impact your financial stability. If your paycheck is smaller than expected or you are worried about your tax refund, now is the time to take action.

Contact Smart Loan Aid today to review your options and learn what steps may be available to help you regain control of your federal student loans (844) 869-5521