As unemployment rates continue to rise, the Trump Administration is set to resume wage garnishments for student loan borrowers in default as early as this month.
This decision would become the first time the federal government would enforce loan repayments since collections were paused in March 2020 as a result of the global COVID-19 pandemic.
Between March 2020 and September 2023, loan repayments were halted, offering borrowers a period of relief as the pandemic caused economic challenges, leaving many without income and job loss. In addition, involuntary wage garnishments and increasing interest rates were suspended.
CNBC confirms that close to 1,000 student loan borrowers who have reached the maximum missed payments are expected to be contacted by the Education Department with notices of payments being taken out of their earnings. The first round of borrowers are expected to receive notices beginning the week of January 7. The number of notices plan to increase each month.
The April 2025 announcement from the department read, “resuming collections protects taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education.”
“Education should be a pathway to opportunity, not a punishment,” said Derrick Lewis, NAACP Youth & College Division Interim Director. “Garnishing wages from student loan borrowers is not only unjust, it’s tone-deaf, and will ultimately cause disproportionate harm to Black communities.”
A 2025 College Board report shows that across the last 30 years tuition and fees has increased from $5,940 to $11,950 for public four-year in-state students and from $25,820 to $45,000 for students enrolling in private four-year institutions.
While college tuition continues to increase nationwide, students are expected to enter the current workforce with student loans wavering above them. “The thought of loan garnishments is overwhelming,” Sagal Buchanan, college senior at Bethune Cookman University tells ESSENCE. “It’s unsettling to step into a job market that is uncertain, especially for Black graduates who tend to face higher unemployment rates and lower starting wages.”
In November 2025, Black unemployment reached 8.3 percent, almost doubling the national rate of 4.6 percent. Contributing to this data, the Trump Administration’s cut to federal jobs impacted Black workers in every state according to findings from the Economic Policy Institute.
Layoff announcements reached up to 1.1 million from both the nonprofit and corporate sector last year in response to company restructures and other economic conditions with more than 300,000 Black women impacted between February and April.
Today, there are more than 5 million borrowers in default with only 38 percent of the 42.7 million borrowers up-to-date in payments on their student loans. Earlier this year, the Department stated that as 4 million borrowers are reaching the end of their delinquency stage, the number of borrowers in default could increase to almost 10,000 in just a few months.
Research from the Education Data Initiative shows that more than 50 percent of Black borrowers owe more in college debt than their current earnings and savings with that same demographic owing the highest monthly payments among all racial groups.
“Student loans help make access to education possible, especially in a system where financial barriers are often rooted in long-standing racial and economic inequities for many Black families,” added Buchanan.
The current administration emphasizes “there will not be any mass loan forgiveness,” urging borrowers to repay their student loans. It is important to note that debt collection from wages and tax refunds without a court appearance is authorized, garnishing up to 15 percent of a borrower’s income if a payment is not made after 270 days.
If borrowers are seeking more information about loan repayments, Federal Student Aid provides details on how to prevent default and steps to reverse wage garnishment.