When Keisha Moore, a 34-year-old medical billing clerk in Memphis, opened her pay stub in late April 2026, she found $390 missing. No court date, no warning she recognized as urgent, just a federal garnishment order that had reached her employer while she was juggling rent and car payments. Moore is one of a growing number of borrowers discovering that the five-year pause on federal student loan collections is over and that the government is now pulling money straight from paychecks. Under federal law, the Department of Education can withhold up to 15% of a worker’s disposable pay without ever stepping into a courtroom. On a $3,000 monthly take-home, that is $450 gone before groceries or a single other bill gets paid.
How wage garnishment works and what the law allows
The legal authority behind these deductions is not new or ambiguous. Under 31 U.S. Code Section 3720D, the federal government can garnish up to 15% of disposable pay for delinquent nontax debt, including defaulted student loans, unless the borrower consents in writing to a higher amount. Before any money is withheld, the government must send written notice at least 30 days in advance and give the borrower a chance to review records, dispute the debt, or request a hearing.
Once a valid garnishment order reaches an employer, the employer has no legal room to refuse. The Bureau of the Fiscal Service, which coordinates debt collection across federal agencies, operates an employer-facing calculator that enforces the 15% cap in real time. This is not a soft guideline. It is the operational infrastructure the government uses to pull money directly from paychecks nationwide.
Wage garnishment is only one tool in the collection arsenal. The Department of Education can also seize federal tax refunds through the Treasury Offset Program and report defaults to all three major credit bureaus. For borrowers who filed 2025 tax returns expecting a refund this spring, that offset may have already landed as an unwelcome surprise.
How collections restarted and where things stand now
The Department of Education announced in early 2025 that collections on defaulted federal student loans would resume on May 5, 2025, beginning with the Treasury Offset Program. Operational guidance the department sent to colleges at the time indicated that administrative wage garnishment would follow “later that summer.” The Associated Press independently confirmed the restart, reporting on the strain it would place on borrowers already dealing with rising living costs.
By spring 2026, the collection machinery is fully operational. Federal Student Aid has been sending the required 30-day garnishment notices, and employers across the country are processing withholding orders. Persis Yu, deputy executive director at the Student Borrower Protection Center, has noted that many borrowers never received or recognized the notice letters, leaving them blindsided when deductions appeared on their pay stubs.
The exact number of borrowers now facing garnishment has not been published in a single consolidated figure by the department. However, the scale is significant. Before the pandemic pause, millions of federal student loan borrowers were in default, and operational guidance sent to colleges referenced large portfolio-level estimates of borrowers in default or late-stage delinquency. The department asked institutions to share repayment information with former students to help prevent additional defaults from swelling the numbers further.
What borrowers often overlook
One gap that catches many borrowers off guard is how federal garnishment interacts with state wage protection laws. Federal law sets the 15% ceiling, but some states cap total garnishment from all creditors at lower thresholds. If a borrower already has a state court garnishment order on their paycheck for child support or medical debt, the addition of a federal student loan garnishment can push total withholding to levels that make basic expenses impossible. The interplay between federal and state orders on a single paycheck is not clearly addressed in any of the department’s borrower-facing materials.
Another overlooked factor: income-driven repayment plans, which historically offered a path out of default through consolidation, have been complicated by ongoing litigation. Court challenges to the SAVE (Saving on a Valuable Education) plan have created uncertainty around which repayment options are fully available. Borrowers exploring alternatives to garnishment should check the Federal Student Aid loan simulator for the most current options, but should also be prepared for some plans to be temporarily unavailable or modified.
Steps to take before a garnishment order reaches your employer
The 30-day notice window is the single most valuable period a borrower in default has. Once a garnishment order reaches an employer, reversing the process takes months and the leverage shifts almost entirely to the government. Before that happens, borrowers have several options:
Loan rehabilitation allows a borrower to make nine voluntary, affordable monthly payments over ten months to pull a loan out of default. Completing rehabilitation removes the default notation from credit reports.
Loan consolidation lets a borrower combine defaulted loans into a new Direct Consolidation Loan, immediately ending default status, though the borrower must either agree to an income-driven repayment plan or make three consecutive voluntary payments first.
Income-driven repayment plans can reduce monthly payments to as little as zero for borrowers with very low incomes, though availability depends on which plans are currently active given ongoing legal challenges.
The first step for anyone unsure of their loan status is to log in at studentaid.gov and check. Borrowers who act before a garnishment notice arrives have the widest range of options. Moore, the Memphis billing clerk, learned that the hard way. She has since entered loan rehabilitation, but the months of reduced paychecks left her behind on rent. “I kept thinking the pause meant they forgot about me,” she said. They did not, and for the millions of borrowers still in default, the clock on that 30-day notice window is already running.
