When Will Wage Garnishments For Defaulted Student Borrowers Resume? It's Unclear

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The Department of Education said a year ago it would resume collections from the millions of federal student loan borrowers who have defaulted on their debt—and has yet to fully implement those efforts.

Federal student loan borrowers have not faced consistent student loan collections since before the COVID-19 pandemic. Typically, borrowers who do not make payments for more than 270 days are considered in default and will eventually see part of their wages or government benefits garnished by the Treasury Department if not recitified.

Currently, 8.8 million federal student loan borrowers are in default, with millions more in delinquency. These borrowers still have time to bring their debt back into good standing before wage garnishments resume, which makes it harder to pay other debts or bills or to fix their student debt.

The Department of Education has gone back and forth on implementing wage garnishments after it announced in May 2025 that it would resume collections on defaulted student loans.

However, in December, the Department of Education said the implementation was taking longer than expected and planned to resume wage garnishments in early 2026. Less than a month later, the department retracted its statement.

At the time, the Department did not provide a timeline for when garnishments would resume, but said the pause would give them more time to implement changes to repayment plans under the 'One Big Beautiful Bill.' A major change includes the introduction of a new income-driven repayment plan, called the Repayment Assistance Plan, on July 1, 2026.

“These are new tools that won't become available to borrowers until at least July 1 of this year," said Nicholas Kent, undersecretary of Education, at a Brookings event on March 19. "We've been very clear, [this is] a temporary pause, but we want to work with borrowers to get them into that new repayment plan... and put them on track.”

On the same day, the Education Department announced it was transitioning the responsibilities of federal student loans to the Department of the Treasury and said the Treasury's first move would be to resume collections on defaulted debt.

Scott Buchanan, executive director of the Student Loan Servicing Alliance, an industry trade group, told Investopedia that the Treasury Department will begin with voluntary collections. That means the Treasury or its contractors will contact defaulted borrowers to discuss options like loan rehabilitation or consolidation.

"Under the previous administration, they weren't doing any outbound calling," Buchanan said. "So basically, if you wanted to resolve your defaulted loan, you had to call the default resolution group and ask for help, as opposed to what Treasury is going to begin doing in short order, which is doing outbound calling to people who are in default."

Voluntary collections will begin about four or five months from now, Buchanan estimates. It is currently unclear when involuntary collections, which generally involve wage garnishments and tax offsets, will begin.

It is also unclear whether Social Security benefits will be included in garnishments when they begin. Last year, the Department of Education said it was pausing Social Security garnishments until further notice. In December, the department said it had "put a pause" on any future garnishments, the Department of Education told Investopedia in an email.

Neither the Department of Education nor the Treasury Department responded to questions about whether Social Security benefits will be included in the upcoming wage garnishments. Neither department answered questions about the exact timeline for resuming involuntary garnishments.

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