Student Loan Wage Garnishment

The Trump administration has announced that taxpayers with delinquent student loan accounts will once again see their wages garnished to repay the amounts owed.   The announcement comes after a five-year pause on collection efforts on delinquent student loan accounts.  The Department of Education announced that, starting May 5, student loan borrowers who have not paid their loans for at least 270 days could see blocked federal benefits, including payments from Social Security, and even wage garnishment in order to repay their loans.  Student borrowers who are in default will be given 30 days’ notice before their wages are garnished, according to Trump administration officials.  The government can garnish up to 15% of the delinquent student loan borrower’s wages.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about Trump’s decision to begin garnishing the wages of student borrowers who have not made their required payments.

Below is a summary of the debate that ensued between the two professors.

Their Votes:





Their Reasons:

Byrnes: For far too long, student loan borrowers in this country have been given a free pass by the Biden administration.  Sure, there was a brief period of time during COVID when unemployment was so widespread that pausing student loan obligations made sense.  That period is now far in the past and it’s high time that student loan borrowers were held responsible for these loans that they freely accepted for the valuable benefit of obtaining higher education.

Bloink: Millions of Americans struggle to pay their student loans on top of everyday expenses.  This is such a widespread problem that we cannot ignore it.  The interest that continues to accrue on student loan balances creates a problem in itself—many student loan borrowers have no real hope of ever repaying their loans.  Protections should continue in place for student borrowers with no real ability to repay their loans.

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Byrnes: It’s estimated that over five million Americans have essentially been given a free pass over the last five years.  Many have elected to make extravagant purchases rather than responsibly pay their student loans—apparently with the expectation that the Biden administration was going to impermissibly forgive their loans anyway.  Americans who have been responsible and paid their debts shouldn’t now be held responsible for the choices of others who are in default.

Bloink: The problem of excessive student loan debt has the potential to impact us all.  When we fail to give student borrowers options and simply elect to blindly garnish their wages without due respect to the situation, many will be unable to meet other obligations--mortgage defaults could rise, credit cards could go wholly unpaid and in the most extreme cases, the borrower might end up on the streets.  This is a larger problem with the potential to impact the economy as a whole.

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Byrnes: Student loan borrowers freely elected to take on student debt to gain the benefit of higher education.  Now, they expect hardworking taxpayers who didn't have that benefit--and those who have responsibility paid their own debts--to step in and bail them out.  That's simply unacceptable and it's not how this country works—in fact, wage garnishment is simply a return to the way the system has always worked.

Bloink: We don't even go so far as to garnish the wages of individuals who have failed to pay their credit card debt without judicial intervention.  Why should student loans be singled out?  Programs that existed during the Biden administration were taken down—including income-based repayment applications.  Now that some have been restored, there simply isn’t enough time for borrowers to get back on track (when options are even available) before these wages garnishments begin—all at a time where we should remember exactly how uncertain the economy has become amid Trump’s trade war.