For millions of Americans who’ve spent the past few years waiting for relief from their student loans, the break is over. After nearly three years of suspended payments, the government is resuming debt collection for federal student loans in April 2025. The decision to bring back repayment collections means that millions of borrowers could soon face wage garnishments, tax refund seizures, and other severe consequences if they haven’t made arrangements to repay their loans.
For many, the prospect of having a portion of their paychecks taken can feel like a financial nightmare, especially as the country continues to recover from the pandemic’s economic toll. This is the first time since March 2020 that debt collection measures will resume, and for those who have fallen behind on their student loans, the reality of wage garnishment is now closer than ever.
What Does This Mean for Borrowers?
The federal government stopped collections on student loans in 2020 due to the pandemic, offering temporary relief for millions who were struggling to make ends meet. But now, with the suspension lifted, that financial breathing room is coming to an end. Starting in April 2025, the government will begin taking action to collect on the loans that have been in default during the pause. For those who are in default, wage garnishment is one of the most severe methods of collection.
Wage garnishment means that a portion of a borrower’s paycheck is automatically deducted and sent to the lender to pay off the debt. Federal law allows up to 15% of disposable income to be taken through this process, which can add up to a substantial amount, depending on the borrower’s income level. For example, if someone earns $3,000 per month, they could have as much as $450 taken from their paycheck every month.
“I know a lot of people who’ve been able to catch up on other bills and expenses during the pause,” said Sarah, a 32-year-old borrower from [City]. “But with the garnishment resuming, I don’t know how I’ll keep up. That’s a huge chunk of money out of my paycheck.”
Who’s at Risk?
According to the U.S. Department of Education, about 9 million borrowers are currently in default on their federal student loans. For these individuals, the resumption of collections means that they could soon see their wages reduced, tax refunds seized, and even social security benefits withheld.
The reality of wage garnishment can be crushing for people already living paycheck to paycheck. And with the cost of living rising, many borrowers are understandably worried about how they’ll survive financially.
“Even though the payment pause has given me some time to breathe, I’m still behind,” said James, a 40-year-old from [State]. “I can’t afford to lose 15% of my income right now. It feels like I’m being punished for something that wasn’t even my fault.”
The Financial Burden of Garnishment
For many, wage garnishment is more than just a financial setback—it’s a life-changing event. Losing 15% of your paycheck means you have less money for rent, groceries, utilities, and other essential expenses. For those already struggling to make ends meet, this can lead to further financial strain, anxiety, and even homelessness in some cases.
“If the government starts garnishing my wages, I don’t know how I’ll make rent,” said Jessica, a single mom with two kids, who’s been in default on her student loans for several years. “I’ve been trying to catch up, but with everything else going on in my life, it’s hard. I feel like I’m being set up to fail.”
What Can Borrowers Do?
Though the return of collections is unsettling, borrowers aren’t powerless. There are several steps people can take to avoid wage garnishment or to reduce its impact.
First and foremost, borrowers should contact their loan servicer as soon as possible to discuss their options. Income-driven repayment plans, which base monthly payments on a person’s income, can offer more manageable terms. Additionally, loan rehabilitation programs can help borrowers bring their loans out of default and stop wage garnishment from being enforced.
“The most important thing is to reach out for help before garnishment starts,” said financial expert John T. Smith. “There are options out there, but you have to act quickly. Don’t wait for your paycheck to be reduced.”
What’s the Bigger Picture?
The return of student loan debt collection has broader implications for the U.S. economy. When millions of Americans are saddled with debt that’s being actively collected, they have less money to spend on goods and services. This could impact consumer spending, which drives economic growth. Additionally, the mental and emotional toll of dealing with wage garnishment can lead to higher levels of stress, anxiety, and even depression.
“The financial burden of student loans isn’t just about the money,” said Dr. Lisa Johnson, a mental health expert. “For many, it’s about feeling trapped and powerless. And when you factor in the collection tactics like garnishment, it can really take a toll on someone’s mental health.”
Could Debt Forgiveness Help?
As the nation faces the consequences of resuming debt collection, some are calling for broader solutions, such as student loan forgiveness. Many borrowers and advocates argue that forgiving student loan debt could help lift millions out of financial hardship and boost the economy by giving people the freedom to spend and invest in their future.
“Forgiving student loans could be a game-changer,” said an advocate for student debt relief. “It would give people the chance to rebuild their financial lives without the constant fear of wage garnishment or tax refund seizures. It’s time for the government to make a bold move.”
What’s Next?
As the deadline for student loan payments draws near, borrowers are feeling a mix of anxiety, uncertainty, and frustration. While there are options available to manage loan repayment and avoid garnishment, the reality is that many people will struggle with the resumption of debt collection.
For those facing financial hardship, reaching out to their loan servicer for support is crucial. Time is running out, but there’s still a chance to take action and potentially reduce the damage.
