Behind on student loans? You could be losing money from paycheck

The federal government has officially resumed garnishing wages and withholding benefits from student loan borrowers after years of legal limbo.

The Trump administration has made several moves to limit repayment options and enforce collections after an extended COVID-era pause. The federal Education Department announced a proposed legal agreement to squash the Saving on a Valuable Education, or SAVE, plan in December 2025, dealing a final blow to the Biden administration's efforts to forgive or reduce the $200 billion burden of repayment on 5 million federal borrowers.

More than 7 million SAVE borrowers have been in administrative forbearance, not requiring payments, since June 2024. Interest on their debt restarted in August 2025 and the administration announced plans to resume wage garnishment on borrowers behind on payments beginning Jan. 7, according to reports.

Here's what to know about who is at risk of having money taken from their paycheck.

USA TODAY reached out to the Department of Education for comment.

What happens if you're behind on student loan payments?

If you miss a payment or two on your federal student loans, you won't automatically be in bad standing. Your loan will become delinquent on the first day after you miss a payment, usually resulting in late fees or potential dings to your credit score, according to the Federal Student Aid Office of the Department of Education.

If you go long enough without making a payment, your loans may go into default, at which time the government can begin involuntary collections, automatically taking money out of your paychecks, tax refund or other federal benefits.

What is wage garnishment?

Wage garnishment is a legal process in which money is withheld from an employee's paycheck to pay back a debt. The money is collected by employers and sent to the relevant creditors, usually after a court order or other legal notice.

Common reasons for wage garnishment include child support, student loan debt, credit card debt, bankruptcy, or unpaid taxes, according to ADP, a company that provides payroll processing. An employer can face steep fines or legal penalties for failing to garnish an employee's wages.

The amount that can be withheld from a paycheck is dependent on the type of debt owed, state and federal law. Garnishment stops after the debt has been repaid, the garnishment order revoked or the period of time set out in the order ends.

What is the Treasury Offset Program? What can it collect from you?

The Treasury Offset Program is the centralized government program for collecting debts owed to federal and state agencies, such as child support and defaulted loans.

The term "Treasury offset," as used by the FSA office, refers to the government's ability to withhold your tax refund or other federal benefits, such as Social Security checks, as a form of repayment.

Who is at risk of involuntary collections on student loans?

Only people who have student loans in default are at risk of wage garnishment or other withholdings.

For your federal student loans to be considered in default, you must have missed 270 days of payments. You will then receive a letter from the Department of Education’s Default Resolution Group, outlining how much you owe and what steps you can take to resolve the default status, including applying for relief, a smaller monthly payment or requesting a hearing, according to the FSA office.

If you don't make a payment or take action to resolve the issue for more than 360 days, the government can begin garnishing your wages or recouping the debt in other ways, without a court order. If they plan to use Treasury offset to recoup the funds, you will receive a notification by mail from the U.S. Department of the Treasury at least 65 days before the withholding begins.

In the case of federal student loans, the government can withhold up to 15% of your paycheck, 100% of your tax refund and up to 25% of your Social Security benefits.