Labor & Employment Law Daily Wrap Up, AGENCY NEWS—Department of Education announces plans to begin wage garnishment for student loan borrowers in default, (Apr 22, 2025)

By Brandi O. Brown, J.D.

The wage garnishment potentially could impact millions.

Yesterday, the Department of Education announced that its Office of Federal Student Aid would resume collections on defaulted student loans, an action that has been on hold for five years.

According to the Education Department, more than five million borrowers have not made a monthly payment in over 360 days and sit in default, while four million borrowers are in late-stage delinquency (91-180 days). As a result, the department states, there could be almost 10 million borrowers in default in a few months.

FSA plans to restart the Treasury Offset Program, which is administered by the U.S. Department of Treasury, on Monday, May 5, 2025. Borrowers in default are supposed to receive email communications from FSA over the next couple of weeks and will be urged to contact the Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. “Later this summer,” the announcement notes, “FSA will send required notices beginning administrative wage garnishment.”

News: AgencyNews EconomicNews