Following the end of pandemic-era pauses, the federal government has ramped up efforts to collect on defaulted student loans. As many as 2 million borrowers are expected to face wage garnishment this summer if they fall into default, with another 3 million more projected by September.
Recent data from TransUnion highlights the scale of the crisis: nearly 6 million borrowers are at least 90 days behind on payments, with about one‑third of them—or 1.8 million people—likely to default by July. Default is officially triggered after 270 days of missed payments, which can result in wage garnishment of up to 15%, plus the withholding of tax refunds and federal benefits.
Unfortunately, the ripple effects are significant. Borrowers entering default have already experienced major credit damage—with average credit scores dropping by around 60 points—and anticipate further declines this year. And with over 43 million Americans owing a collective $1.6 trillion in federal student debt, nearly one-third of borrowers are at financial risk.
The resumption of federal collections after years of relief is triggering a wave of financial strain for millions. If you or someone you know is now behind or at risk, it’s essential to act right away to avoid garnishment, credit damage, and long-term financial hardship.
