Student Loan Borrowers Face Wage Garnishment as Defaults Surge

The US Department of Education is restarting collections on defaulted student loans after more than five years, formally ending an era of leniency as US consumers navigate tariff-driven economic uncertainty.

Wage garnishment for borrowers who are not making payments will begin “later this summer,” with the government estimating nearly 25% of its $1.6 trillion student loan portfolio could be in default as overdue payments pile up, the Education Department said in a statement.

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There haven’t been “involuntary collections” on defaulted loans since March 2020, when forbearance measures were put in place that paused ...