Student loan borrowers in default could soon see reduced paychecks. What to know

Brandon Bell | Getty ImagesWhen the Trump administration first announced in April that it would soon resume student loan collection efforts, it said notices for wage garnishment would resume "later this summer." It's still a time frame the Education Department has cited in s, as recently as earlier this month.But with Labor Day coming up, it has yet to reveal a specific date.The department did not respond to a request for on the timeline of wage garnishments."Getting these grams set back up takes time," said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers. "I would expect at least a month or more" before garnishment begins, he said.More from Personal Finance:Trump floats tariff 'rebate' for consumetudent loan forgiveness may soon be taxed againStudent loan borrowers — how will the end of the plan impact you? Tell usCollection activity on federal student loans has been mostly paused for around five years, since the start of the Covid pandemic in 2020

It's a significant change for borrowers to have their paychecks at risk again, consumer advocates say.As of a May announcement, more than 5.3 million student loan borrowers are in default."I would strongly advise borrowers to not wait to take action until wage garnishment begins," Buchanan said.Here's what to know tecting your wages if you're behind on your student loans.Federal government can take up to 15%The U.S

Department of Education can garnish up to 15% of your disposable, or after-tax, pay, said higher education expert Mark Kantrowitz.By law, you must be left with at least 30 times the federal minimum hourly wage ($7.25) a week, which is $217.50, Kantrowitz said.It is more difficult for the federal government to garnish the wages of someone who receives 1099 income, Kantrowitz said."If there is no employer, wage garnishment can't happen," he said.You can challenge the garnishmentBorrowers in default should receive a 30-day notice before their wages are garnished, experts said.During that period, you should have the option to have a hearing before an administrative law judge, Kantrowitz said

The Education Department notice is supposed to include information on how you request that, he said.Your wages may be tected if you've recently been unemployed or filed for bankruptcy, Kantrowitz said.Borrowers can also challenge the wage garnishment if it will result in financial hardship, he added.Your employer can't terminate youMost employers will already be familiar with the wage garnishment cess, Kantrowitz said

In addition to student loans, companies can also be asked to withhold a portion of their employees' wages for child support, alimony and unpaid taxes.Your boss is not allowed to terminate you because of the wage garnishment, Kantrowitz said.Now is the time to get out of defaultYou can the government's Default Resolution Group and pursue a number of different avenues to get current on your loans, including enrolling in an income-driven repayment plan or signing up for loan rehabilitation. "Once garnishment begins there will be a flood of calls, and cessing times for rehabilitations could be much longer depending on volume," Buchanan said. "Use the next month or so to call the Default Resolution Group and discuss your options to avert garnishment."Don’t miss these insights from CNBC Morgan Stanley says nu power is gaining momentum, recommends these stocksWells Fargo hikes S&P 500 target as U.S. tariffs get delayed againMorgan Stanley maintains bullish stance on Nvidia heading into earnings, raises price targetWhy UBS just raised its gold forecast again as the precious metal hovers near record high