How to get out of student loan default and avoid wage garnishment
After a yearslong pause, the federal government resumed collections on student loans in default in May 2025, putting many borrowers at renewed risk of wage garnishment and other consequences. The change followed more than five years of nonenforcement, during which borrowers in default were shielded from aggressive collection efforts.
Defaulting on student loan debt can lead to severe consequences, including reduced credit scores and wage garnishment. Knowing how to get out of default and avoid garnishment can help you regain control over your student loan debt.
Key Points
- The federal government resumed collections on defaulted student loans in May 2025, more than five years after pausing enforcement efforts.
- Defaulting on a student loan can severely damage your credit and may result in wage garnishment.
- You can avoid default by requesting forbearance, switching to an income-driven plan, or resuming payments.
- If you’re already in default, federal programs like loan consolidation or rehabilitation can help you stop garnishment and bring your loans back into good standing
What is student loan default?
Federal student loans are considered in default after 270 days without payment, but the consequences of falling behind appear much sooner.
Your loan becomes delinquent the day after you miss a payment, although most servicers don’t report the delinquency to credit bureaus until you’re at least 90 days late. That’s often when your credit score starts to take a hit.
How to check if you’re in default
Most federal loans enter default after 270 days of missed payments, although some, like Perkins loans, may follow a different timeline. To check your status, sign in to your StudentAid.gov account. Your loan dashboard shows your servicer, payment status, and whether any loans are in default. And if you’re in default, it’ll list options for getting you back into good standing.
Once your loans are sent to collections, the damage to your credit score can deepen, and if you don’t take steps to get out of default, you could face wage garnishment.
Forbearance vs. deferment
To avoid default, contact your loan servicer as soon as you begin falling behind. You may qualify for forbearance, which typically allows you to pause payments for up to 12 months if you’re experiencing financial hardship. Interest continues to accrue during forbearance, even on subsidized loans.
Deferment, by contrast, is usually available when you’re not expected to earn income—for example, if you’re in school, unemployed, or serving in the military. With deferment, interest may not accrue on certain federal loans, such as Direct Subsidized Loans.
How student loan collections work
Long before the COVID-19 pandemic, falling behind on your federal student loans often resulted in aggressive collections efforts. If you defaulted, the government could take your tax refund, garnish your wages, or even dip into your Social Security payments to collect what you owed.
Such methods were paused in March 2020, when the federal government suspended loan payments and collections to provide relief as part of its pandemic response. For years afterward, borrowers in default were shielded from the harsh consequences of nonpayment.
Starting in October 2023, borrowers were required to resume making payments, but the Biden administration built in a 12-month “on-ramp.” During that window (October 2023 to September 2024), missed payments weren’t reported to credit bureaus, and your loans couldn’t be placed in default or sent to collections.
Once the on-ramp period ended, so did the protections. And because loan servicers typically wait 90 days before reporting a missed payment, many borrowers who stopped paying in late 2024 didn’t start seeing the fallout until early 2025. That’s when more than 2 million newly delinquent borrowers saw their credit scores drop by at least 100 points, and another 1 million saw drops of 150 points or more, according to the Federal Reserve Bank of New York.
A separate snapshot, taken by TransUnion in April 2025, showed that nearly a third of federal student loan borrowers—about 5.8 million people—were at least 90 days delinquent. It was the highest delinquency rate since the credit rating agency began tracking the data in 2012. On average, borrowers had lost 60 points from their credit scores. At the time, TransUnion estimated that 1.8 million borrowers could default by midsummer.
Also in April, the Trump administration announced that collections would resume in May. With enforcement back in place, defaulted borrowers once again are facing the possibility of wage garnishment, government payments being withheld, and other involuntary recovery methods.
How student loan wage garnishment works
Once your loans are in collections, the government has two main ways to pursue repayment without your consent.
1. Treasury offset program
The government can take part of your tax refund or Social Security benefits and redirect it toward student loan repayment. You must be notified ahead of time, and you have 65 days to respond before the offset begins.
2. Student loan wage garnishment
Disposable pay vs. disposable income
Disposable pay is a legal term used in wage garnishment cases. It refers to the portion of your paycheck left after mandatory deductions, such as federal taxes, Social Security, and Medicare, have been taken out.
Disposable pay differs from disposable income, which is usually defined as the money you have left after covering basic living expenses. Garnishment limits are based on disposable pay, not disposable income.
Your employer may be required to withhold up to 15% of your disposable pay—that’s the portion of your paycheck left after legally required deductions like taxes and Social Security. You must be notified in advance and given 30 days to respond.
For example, if your gross pay is $1,800 and deductions reduce your take-home pay to $1,200, the government could garnish up to $180 from each paycheck toward your student loan debt.
In either instance, the government requires no court order to begin collection efforts, a step that’s often necessary for private-sector creditors.
How to avoid student loan wage garnishment
If you’re falling behind on student loan payments, there are steps you can take to avoid going into default and prevent wage garnishment from becoming a threat.
Request forbearance, deferment, or forgiveness
If you’re behind on payments, contact your loan servicer to ask about temporary or long-term relief. You may qualify for forbearance due to financial hardship or deferment based on circumstances such as being in school or being unemployed. Deferment may pause interest accrual on certain federal loans, unlike forbearance, which allows for a temporary suspension of payments.
Forgiveness is a separate option that may eliminate your balance after meeting specific repayment or employment criteria.
Switch to an income-driven repayment (IDR) plan
Enrolling in an IDR plan can lower your monthly payments and help you stay in good standing, especially if your income has dropped. Staying on an IDR plan also ensures your loan won’t be considered delinquent.
If you’re dealing with student loan collections, you can avoid student loan wage garnishment by getting a federal consolidation loan or rehabilitating your federal student loans in default.
How to get out of student loan default
If your federal student loans are already in default, you still have options to stop or avoid wage garnishment. Two federal programs—consolidation and rehabilitation—can help bring your loans back into good standing.
1. Federal student loan consolidation
A consolidation loan is often the fastest way to resolve default. You can apply for a Direct Consolidation Loan through your StudentAid.gov account. Once signed in, use the Loan Repayment menu and select Consolidate Loans.
To qualify, you must either make three consecutive voluntary payments on your defaulted loans or agree to repay your new consolidation loan under an income-driven repayment plan. For many borrowers, choosing an IDR plan is the more accessible route, especially if making consecutive payments up front isn’t feasible.
2. Loan rehabilitation
Rehabilitation requires working with your loan servicer to set up a plan for exiting default. You agree to make a series of affordable monthly payments, typically for 9 or 10 months. Once you begin payments, wage garnishment and Treasury offsets are usually suspended. Completing rehabilitation removes the default from your credit history.
Why refinancing federal student loans may not be the answer
Refinancing might sound like a way out of default, but it comes with significant trade-offs. When you refinance a federal student loan and replace it with a private loan, you forfeit federal protections such as deferment or forbearance during hardship, access to IDR plans, and eligibility for loan forgiveness.
What’s more, private lenders typically require strong credit to approve refinancing. If your loans are in default, your credit score may already be damaged, making it harder to qualify or secure a lower interest rate.
What if I’m in a SAVE plan?
The Biden administration’s Saving on a Valuable Education (SAVE) plan is no longer available. Federal courts have blocked the program, and the Department of Education’s special interest-free forbearance ends August 1, 2025.
Borrowers in SAVE will be moved to another income-driven repayment plan, such as income-based repayment (IBR). But forgiveness through SAVE is no longer an option. Sign in to StudentAid.gov to review your repayment status and choose a new plan if needed.
The bottom line
If you’ve fallen behind on your federal student loans, knowing where you stand is the first step toward avoiding collections. Check your status at StudentAid.gov to see whether your loans are in default and who your servicer is. From there, you can explore your options for bringing your loans back into good standing—and sidestep consequences like wage garnishment or loss of your tax refund.
References
- Collections on Defaulted Loans | studentaid.gov
- Student Loan Delinquency and Default |studentaid.gov
- Treasury Offset Program | fiscal.treasury.gov