(NewsNation) — Student loan borrowers in default could see their wages garnished as soon as early next year.
Roughly 1,000 defaulted borrowers are expected to be sent the first garnishment notices the week of Jan. 7, and the notices will “increase in scale” each month, the Education Department said in a statement to NewsNation on Tuesday.
The decision comes after a years-long, pandemic-era pause on wage garnishment and could ultimately affect millions who are behind on their loans.
As of June, about 5.3 million ED-serviced borrowers were in default, and more than four million others were seriously delinquent.
Federal student loans enter default after 270 days of missed payments. Borrowers who haven’t made a payment in 360 days or taken steps to resolve their status could have money withheld to collect the debt, according to the Education Department.
The government can recoup unpaid student loans in several ways, including collecting up to 15% of a borrower’s paycheck or withholding federal benefits and tax refunds.
That involuntary collection process is conducted only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans, the department noted in its statement.
The wage garnishment plan has been months in the works. In July, the Education Department said it expected the process to begin “later this summer,” but that timeline was pushed back.
The Trump administration resumed collection on defaulted student loans back in May, ending a pause that began in March 2020. Since then, delinquent borrowers have started to see their credit scores take a hit.
Those who are at risk of wage garnishment should receive a 30-day notice from the Education Department before it begins.
Borrowers who are set to have their tax refund or federal benefits withheld by the government receive a written notification by mail from the U.S. Department of the Treasury. They then have 65 days to take action.
Nearly 43 million borrowers owe more than $1.6 trillion in federal student loan debt.