Treasury Prepares to Seize Wages from 10 Million Student Loan Defaulters

The United States Department of the Treasury is preparing to hire private debt collectors to seize wages and federal benefits from approximately 10 million Americans in default on federal student loans. The plan, which could begin as early as November, involves reviving collection efforts that were previously paused to avoid economic costs and political backlash from supporters of Donald Trump.

Under the proposed plan, the government can garnish up to 15% of a borrower's after-tax income without a court order or seize Social Security payments and tax refunds. While the administration prefers that borrowers enter voluntary payment plans through the newly launched Defaulted Loans Support Center, some officials are advocating for garnishments for the current tax year.

The United States Department of the Treasury and the White House Office of Management and Budget have declined to comment on the initiative, and the United States Department of Education dismissed inquiries as "fishing expeditions." The Committee for a Responsible Federal Budget reports that postponing these collections has already cost taxpayers roughly $5 billion.