Household Debt and Consumer Finance

The Education Department under the Trump administration will resume involuntary collections for federal student loans in default, sending about 1,000 initial wage‑garnishment notices the week of Jan. 7, 2026 with volumes increasing monthly; collections will include wage garnishments (federally authorized up to 15% of after‑tax wages), seizure of tax refunds and Social Security benefits, and the department says borrowers will receive at least 30 days’ notice and an opportunity to repay. The DOE cites the Higher Education Act and the Debt Collection Improvement Act as its legal basis, while advocates — including Persis Yu of the Student Borrower Protection Center — condemn the move and lawmakers such as Rep. Ayanna Pressley and Sens. Elizabeth Warren and Cory Booker have introduced legislation to block the garnishments.