After back and forth policy changes in Washington, D.C., on dealing with collecting on student loan defaults, the government is implementing a more aggressive approach — wage garnishment.
With the end of 2025, nearly 43 million Americans with student loan defaults will have to start repaying.
Beginning this month, the U.S. Department of Education will send notices of administrative wage garnishment to owners of loans in default. It will affect people who have these federally based loans and have not made a payment for 270 days.
The Education Data Initiative reported Utah has around 321,000 student borrowers with a total debt of almost $11 billion. At 8.3%, student loan default rates within the Utah System of Higher Education are lower than the national average of 11.8%.
Jack Wallace, director of government and lender relations for the student loan refinancing firm, Yrefy, said borrowers need to be proactive.
"We need to not put our heads in the sand and pretend like this is going to go away," Wallace said. "If you're getting an email from your servicer soon, which you should be, or getting an envelope by the U.S. Post Office from your servicer, you need to open it up and find out what's going on.
The Treasury Offset Program is the automated system the federal government will use to collect delinquent debts. Garnishments can include up to 15% of a borrower's wage and also applies to 2026 federal tax refunds, Social Security retirement and disability benefits or other government payments.
Wallace pointed out options exist for borrowers who want to change the status of their loan. Contacting the Department of Education's Default Resolution Group is the first step. They provide guidance on managing student loans, refinancing and getting loans out of default. He explained borrowers need to make timely payments on a new repayment plan in order for this option to succeed.
"There’s ways to do it," Wallace said. "Begin to make on-time payments and get it entered into the rehabilitation program so you get out of default, but you've got to make your payments on time, and you've got to make nine of them on time to get yourself back in good graces and get out of default."
Wallace added if you're still attending school and are unable to repay a loan, you can request the loan be put in forbearance or deferment.
According to the Education Data Initiative, Utah has one of the lowest average student debts in the nation, at approximately $19,000, compared to a national average close to $28,000.