The Trump administration is getting ready to start going after the wages and benefits of borrowers who are in default on their federal student loans, according to recent reporting. The efforts are the culmination of months of internal debate and preparation as default rates skyrocket for student loan borrowers.

According to recent reporting on Monday by The Washington Sun , the Education Department is working with the Department of Treasury to hire private debt collection agencies, which will start pursing defaulted federal student loan borrowers as soon as November. The Education Department previously entered into an interagency agreement with the Treasury Department earlier this year to handle its defaulted federal student loan portfolio.

Critics slammed the Trump administration for the decision to pursue student loan borrowers’ wages and benefits.

“The administration is reportedly preparing to hire private debt collectors to go after the nearly 10 million Americans in default on their federal student loans,” said the Roosevelt Institute in a statement on X on Monday. “Once again, they throw the rulebook at low-income Americans while letting grift and corruption fly for the well-connected.”

The Trump administration has repeatedly threatened to go after defaulted federal student loan borrowers, only to back off at the last minute. But this time, the threat may be real. Here’s what borrowers in default on their student loans should know.

Defaulted Federal Student Loan Borrowers Can Get Wages Seized

Federal law allows the government to seize a portion of a defaulted federal student loan borrower’s earnings through a process called administrative wage garnishment. In most cases, creditors and lenders must file a lawsuit and go through the court system to seize a debtor’s wages. But for defaulted federal student loans, the government can bypass the court system and directly order employers to deduct a portion of a borrower’s paycheck and send it to the Education Department, which then applies it to their balance. A portion of the seized earnings can sometimes go to hefty collections fees and penalties.

“If you have defaulted on your federal student loans, the government can tell your employer to withhold up to 15% of your wages to collect your student loans without taking you to court,” explains the National Consumer Law Center in its Student Loan Borrower Assistance website . “This is called an administrative wage garnishment. The garnishment continues until your defaulted loan is paid in full or your loans are removed from default. Your employer shouldn’t be able to fire you or take any adverse action against you for having your wages garnished for a federal student loan debt.”

Wage garnishment can be devastating for federal student loan borrowers, and can be difficult to remove once it gets implemented.

Defaulted Student Loan Borrowers In Default Can Also Be Subject To Tax And Benefits Offset

The federal government also has unique powers to intercept federal tax refunds for borrowers who are in default on their federal student loans.

“The government can take some or all of your federal tax refund to pay off your debt,” says NCLC. “You should get a letter right after your loans first go into default (see our page on these types of notices), but you probably will not get another notice before the government takes your tax refund. If your tax refunds have been taken in the past, you may not get another letter before the government takes your refunds again in the future. The government will continue taking your tax refunds until your debt is fully paid off.”

The same power, called Treasury Offset, also allows the government to offset federal benefits, such as Social Security.

“If you have defaulted on your federal student loans and you receive Social Security Disability or retirement benefits, the federal government may withhold up to 15% of your benefits each month to pay back your student loan debt, as long as your remaining monthly benefit stays above $750,” continues NCLC . “This is called an offset. The offset continues until your defaulted loan is paid in full, you are removed from default, or you are able to get the Department of Education to stop the offset."

Defaulted federal student loan borrowers who are receiving Supplemental Security Income (SSI) or Veterans Benefits should not be subject to offset, however.

Student Loan Borrowers Are Supposed To Receive Formal Notice

Defaulted federal student loan borrowers who will be subject to administrative wage garnishment, tax refund interception, or federal benefits offset are supposed to receive formal written notice before government initiates the seizure. That notice, which typically is sent by mail to the borrower’s last known address, gives the borrower a fixed window of time to respond, object, or otherwise address the defaulted federal student loans. That window of time is typically 65 days for Treasury Offset, and 30 days for administrative wage garnishment and Social Security offset.

“After your loan enters default and becomes eligible for collections, you should get an initial notice from the Department of Education explaining the actions the government can take to collect the defaulted student loan," says NCLC. “The notice is sometimes called the 'initial 65-day notice’ because it will give you 65 days to respond before any collections will occur.”

“In addition to the initial 65-day notice, you should also get another notice before your wages are garnished,” continues NCLC. “This notice must be sent to you at least 30 days before the government tells your employer to garnish your wages. The notice should tell you that garnishment is about to begin and should offer you options to avoid garnishment or reduce the amount taken.”

Those options can include applying for a student loan discharge , contesting the validity of the student loans, filing for bankruptcy, paying off or settling the debt, or resolving the underlying defaults. Borrowers can also submit a formal objection on the basis of financial hardship, although historically the Education Department tends to deny these hardship-based objections unless the borrower is in extremely dire financial circumstances. But ultimately, borrowers must act within the 30-day period, or a garnishment order will be sent to their employer.

In some cases, borrowers don’t receive the notices because their address has changed. But the Education Department, Treasury Department, and contracted debt collection agencies aren’t required to make exhaustive efforts to track down a defaulted student loan borrower. They are only required to send the notice to their last known address.

“Make sure your address is updated with your loan servicer and on studentaid.gov especially if you moved recently,” says NCLC."

Options To Resolve Student Loan Default

Borrowers who are in default on their student loans and don’t qualify for an immediate discharge or hardship relief can take steps to get out of default. And there are federal programs that can facilitate default resolution. Getting student loans out of default and back into good standing can allow borrowers to access federal relief programs such as deferment, forbearance, income-driven repayment, and profession-based student loan forgiveness. But default resolution programs can also come with some downsides.

One potential option is federal student loan rehabilitation, a temporary payment plan that allows borrowers to restore their student loans to good standing again after a minimum of nine monthly payments that are supposed to be “reasonable and affordable.” There can also be credit reporting benefits to loan rehabilitation, including a deletion of any reference to the default status. But even “reasonable and affordable” rehabilitation payments can be expensive, and borrowers who are already in wage garnishment may have to make rehabilitation payments on top of their garnishment amount for a portion of the program. Borrowers also must then affirmatively enroll their student loans into an appropriate repayment plan once they are back in good standing; otherwise, they could fall back into default again.

Another option is federal Direct loan consolidation, where the borrower takes out a new consolidation loan from the Education Department that ultimately pays off the defaulted student loans. This can sometimes be a faster and simpler process than rehabilitation, without the need for a lengthy repayment plan. But borrowers whose wages are being garnished may not be able to consolidate their loans. And following passage of the One Big, Beautiful Bill Act, consolidating loans right now could restrict a borrower’s repayment plan options and erase any existing student loan forgiveness credit, making consolidation a potentially risky move .

The Education Department recently established a new online default resolution portal for federal student loan borrowers. Trump administration officials have touted the portal as a useful tool to navigate the default resolution process. But the portal is largely untested, and may not provide borrowers with the comprehensive information and counseling needed for them to make informed decisions about their options. And with the pressure of debt collection agencies likely arriving in the coming weeks, millions of borrowers in default on their student loans may soon be facing some difficult choices.