- Student-loan borrowers in default are at risk of federal benefits garnishment starting in early June.
- Millions more defaulted borrowers could face wage garnishment later this summer.
- Trump restarted collections on defaulted student loans in May, after a five-year pause.
Thousands of student-loan borrowers are at risk of getting a smaller Social Security check this month.
President Donald Trump's Department of Education said that, beginning in early June, thousands of student-loan borrowers in default could start facing garnishment of their federal benefits.
"The first monthly benefit checks subject to offset are those scheduled for early June," the department said in early May. "Later this summer, all 5.3 million defaulted borrowers will receive a notice from Treasury that their earnings will be subject to administrative wage garnishment."
The department said it sent 30-day notices to 195,000 defaulted student-loan borrowers in May, warning them of benefits garnishment.
This move results from the Trump administration restarting collections on defaulted student loans on May 5. Under a pause first put in place by Trump during the pandemic, borrowers were free of collections and negative credit reporting for falling behind on their payments.
Those protections are now over, which Education Secretary Linda McMahon said is necessary to restore accountability to the student-loan system.
"Borrowing money and failing to pay it back isn't a victimless offense. Debt doesn't go away; it gets transferred to others," McMahon wrote in a May opinion piece.
A federal student-loan borrower typically enters default after missing payments for more than 270 days. In addition to the 5 million borrowers currently in default, the New York Federal Reserve said that the number of borrowers who transitioned into serious delinquency surged from 0.8% in 2024 to 8.04% in 2025, putting those borrowers at risk of defaulting this summer.
Borrowers in default have a few options to return to good standing, but they are time-consuming. One option is loan rehabilitation, in which a borrower has to sign an agreement to make nine payments within 20 days of their payment due date for 10 consecutive months. With this option, payments can be as low as $5 a month, and after rehabilitation, the defaulted loan will be removed from the borrower's credit reports.
Other options include loan consolidation, in which borrowers can consolidate their defaulted loans into a federal direct loan, or the borrower can file for bankruptcy.
Some student-loan borrowers, both in default and delinquent on their loans, previously told Business Insider that they're concerned about their ability to stay afloat financially if some of their wages and benefits are withheld. For example, James Southern, a 63-year-old in serious delinquency, said that he received a $1,414 bill for his student loans that he cannot pay.
"There will be no retirement. I'll die on the job," Southern said. "Even if I were at my full retirement age, they'd garnish the Social Security, so I'm still going to have to work in order to survive."
Are you in default, or concerned about defaulting, on your student loans? Share your story with this reporter at [email protected].
