Paychecks at Risk: Student Loan Defaults Hit Hard in 2026

Starting in early 2026, some people with overdue student loans might see their paychecks shrink. The government is planning to take money directly from the wages of those who haven't paid back their loans. This move is part of a bigger effort to collect overdue payments, which began earlier this year. About 1, 000 people will get notices in January, with more notices sent out each month. Before this happens, borrowers will be told about their status and given a chance to pay back what they owe. However, many people are already struggling with money, and this could make things even tougher.The government can take up to 15% of a person's take-home pay. Employers are usually told to deduct this amount, similar to how taxes are taken out. Borrowers should get a warning 30 days before any money is taken from their paychecks. This news comes at a time when many people are already dealing with high living costs, job worries, and rising healthcare expenses. Adding wage garnishment to the mix could make life even harder for those who are already struggling. It's important to note that the government says they only take this step after giving borrowers enough notice and opportunities to pay. However, critics argue that this could put even more financial stress on those who are already in tough situations.