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Trump admin starts sending notices to student loan borrowers in default ahead of wage garnishment

Fox News

Eric Revell
January 7, 2026
Over 5M federal borrowers currently in default could see up to 15% of wages seized as pandemic-era pause ends
The Trump administration is set to resume wage garnishment for federal student loan borrowers in default, with notices going out starting on Wednesday.
Student loan borrowers in default were given a reprieve from wage garnishment under a pandemic-era pause on collections, which has since elapsed and allowed the garnishment process to resume.
A Department of Education spokesperson told FOX Business that “we expect the first notices to be sent to approximately 1,000 defaulted borrowers the week of January 7, and the notices will increase in scale on a month-to-month basis.”
Borrowers who are in default could see up to 15% of their after-tax wages garnished, along with tax refunds and certain federal benefits, although a minimum weekly income is protected from garnishment. Wage garnishment continues until the defaulted loan is paid in full or removed from default.

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The college-to-office path is dead: CEO of the world’s biggest recruiter says Gen Z grads need to consider trade and hospitality jobs that don’t even require degrees

Fortune

Orianna Rose Royle
January 6, 2026
“People need to reflect on—taking a student loan, going to college and being trained or educated for a profession that is rapidly changing—whether that’s still the right path,” Sander van ’t Noordende, the global CEO of Randstad, told Fortune.
“We all grew up, with our parents saying, ‘go do something in college or university and then do something in an office,’ that path that used to work for a long time is starting to break,” he added.
“You already see that with the graduates finding it harder to find a job. You see that in professions like marketing, communications, design… just look at how good AI already is at some of that.”
Under his helm, the staffing company places around half a million workers in jobs every week—and he has bad news for those who have already forked out thousands for their degree in the hopes of nabbing a cushy office role: You may have more luck landing bartending, barista, or building jobs.

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Welcome to 2026: Some Student Loan Forgiveness Is Now Taxable

NASFAA

Hugh T. Ferguson
January 7, 2026
A change in tax policy for 2026 has created some confusion over how certain forms of student loan forgiveness could now be taxed.
The American Rescue Plan Act (ARP) specified that any student loan debt (federal, institutional, or private) that was modified or discharged from December 31, 2020, through January 1, 2026, is excluded from an individual’s income when they file their tax returns.
This provision was incorporated into ARP during a reconciliation process, and to meet budgetary requirements, it was only able to remain in place for a five-year period. It was also implemented while the Biden administration was considering broader efforts to implement student loan debt cancellation that could have resulted in taxable income without this provision. The U.S. Supreme Court ultimately halted that effort to implement broad-scale student loan debt cancellation.
Now that the provision has expired and students are navigating significant changes to the student loan landscape with the One Big Beautiful Bill Act (OBBBA) revising repayment options, efforts to wind down the Saving on a Valuable Education (SAVE) student loan repayment plan, and ongoing legal challenges to the Department of Education’s (ED) processing of loan cancellation forms, borrowers have been left with questions over how their finances could be impacted.

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Grad Loan Caps Could Hurt Students With Low Credit Scores

Inside Higher Ed

Jessica Blake
January 7, 2026
Researchers found that four in 10 borrowers have credit scores too low for private loans, raising concerns that the new borrowing limits could make grad school inaccessible.
In recent years, at least a quarter of all borrowers pursuing a master’s degree or higher took out more money than will be allowed under new loan caps that take effect July 1, and data shows that those students, on average, would need to borrow more than $21,000 from nonfederal lenders to make up the difference.
Congressional Republicans who put those loan limits in place have stressed that there are plenty of private lenders able to fill the gap. But a recent study shows that based on current lending standards, many of the students who need these loans won’t be approved to gain access.
Conducted by the Federal Reserve Bank of Philadelphia and American University’s Postsecondary Education and Economics Research Center, the study combines anonymized data representing students’ enrollment trends, borrowing history and credit scores to estimate the share of graduate borrowers who’d struggle to obtain the loans they need.

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