What student borrowers need to know as Trump administration readies to seize wages for defaulted loans

Millions of student loan borrowers could soon see their paychecks shrink as the federal government prepares to restart wage garnishment for people in default — and the rules are stricter than many may realize, experts say.The policy, which was paused starting during the COVID pandemic, is set to come back into force the week of Jan.7.

An initial batch of about 1,000 notices will go out to people with defaulted student loans, according to the Education Department.More notices are set to go out every month moving ahead.Under federal law, the government can seize up to 15% of a borrower’s disposable pay if they have defaulted on federal student loans — without ever going to court.Disposable pay goes well beyond base salary.

It includes “salary, overtime, bonuses, commissions, sick leave and vacation pay,” Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center, told The Post this week.The income shield for low-wage workers is extremely limited, Yu added.Federal rules protect only the first $217.50 a week — equal to 30 times the federal minimum wage — leaving anything above that amount vulnerable to garnishment, Yu explained, noting that the threshold is “far below many states’ minimum wages.”That means borrowers earning close to the poverty line can still have wages taken.The collection tool, known as administrative wage garnishment, allows the federal government to bypass the courts entirely.“No court order is required for the federal government to garnish a borrower’s wages,” Yu said.Borrowers are supposed to receive a written notice giving them 30 days to respond before garnishment begins.During that window, they can try to set up a payment plan or raise objections.But many borrowers never see the warning, according to Yu.“Notably, many borrowers never actually receive this notice because the government lacks good contact information for many borrowers,” the expert said.Once the 30-day perio...