URGENT UPDATE: The U.S. Education Department has just announced that it will begin garnishing the wages of student loan borrowers in default starting in January 2024. This decision marks a significant shift as the agency ramps up collections following a long pause during the COVID-19 pandemic.
Beginning the first full week of January, approximately 1,000 borrowers will receive initial notices about wage garnishment, with that number expected to rise each month. Borrowers could see up to 15% of their disposable wages withheld as early as 30 days after receiving their notice, according to federal guidelines.
The move has been met with sharp criticism. Persis Yu, deputy executive director and managing counsel for the advocacy group Protect Borrowers, condemned the decision as “cruel, unnecessary, and irresponsible.” Yu argues that many borrowers are already struggling financially and that the administration should focus on providing affordable payment options rather than resorting to wage seizures.
The Education Department resumed collection efforts for defaulted federal student loans in May 2023, ending a temporary halt that began in 2020. Under federal law, if borrowers default on their loans, the loan holder has the authority to garnish wages without court proceedings.
Each affected borrower will receive a notice detailing the nature and amount of their debt, as well as their rights regarding the garnishment process. They will have the opportunity to inspect and copy records related to their debt and can avoid garnishment by making voluntary repayments.
This policy change emphasizes the urgency for borrowers to address their student loans before the garnishment process begins. As the situation develops, borrowers are urged to seek financial advice and explore options to manage their debts effectively.
Stay tuned for further updates as this story evolves.