^{Source: Fox Business}

The Trump administration has announced that it will resume wage garnishment for 5.3 million federal student loan borrowers who are currently in default. After a five-year pause, affected individuals could face significant financial consequences sooner than anticipated. The U.S. Department of Education recently provided updates on the timeline and scope of these collection efforts, prompting concerns from borrowers and financial experts alike.

What Borrowers Need to Know

Starting this week, around 195,000 borrowers have been notified that their federal benefits, including Social Security payments, may be garnished within 30 days. This marks a major shift in federal policy, as previous guidance typically allowed 65 days of notice before garnishment began. For many, this accelerated timeline has raised questions and sparked criticism.

Wage Garnishment to Begin This Summer

According to the Treasury Department, notices regarding the garnishment of wages for 5.3 million borrowers will be sent out later this summer. The Education Department has stated that the garnishment process will involve seizing wages, federal tax refunds, and Social Security benefits to recoup unpaid federal student loan debt. Experts warn that retirees and low-income individuals may be disproportionately affected.

A Significant Policy Shift

Since the onset of the COVID-19 pandemic in March 2020, most federal student loan collections had been suspended. The Biden administration had extended relief measures, including pauses on wage garnishment and other aggressive collection activities. In contrast, the Trump administration’s recent decision to resume collections is seen as a stark departure from these borrower-friendly policies.

Impact on Retirees and Low-Income Borrowers

Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York, expressed particular concern for retirees. Nearly 2.9 million Americans aged 62 and older are currently carrying federal student loan debt — a significant increase from 1.7 million in 2017. Many of these retirees rely on Social Security as their primary source of income. Rodriguez warns that losing a portion of these benefits to loan repayment could jeopardize basic necessities, including food and healthcare.

How to Avoid Wage Garnishment

Borrowers who receive a notice of garnishment have several options to mitigate the impact. Contacting the Default Resolution Group can help individuals explore income-driven repayment plans or loan rehabilitation. Additionally, deferment or forbearance may offer temporary relief while navigating financial challenges.

Preparing for Financial Consequences

Experts recommend that affected borrowers take proactive steps by reviewing their loan status and exploring available repayment or consolidation options. Seeking advice from financial counselors can also help minimize the risk of garnishment and manage any financial fallout.

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With millions of borrowers at risk of wage garnishment, staying informed and proactive is essential. The Trump administration’s decision to restart collections has sparked debate and concern, especially given the potential impact on retirees and low-income households. As the situation unfolds, affected individuals should act swiftly to explore their options and protect their financial well-being.

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