How to Protect Yourself from Student Loan Wage Garnishment

Below is the transcript discussing the issues of student loans and wage garnishment beginning May 5, 2025. Please note that the transcript was edited and summarized for clarity.

Okay, so we’re back from Easter and hitting the ground running. I hope everyone had a good break. It was a bit hectic for me with a lot going on, but now, since it’s something new every day, the new issue is student loans.

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Wage Garnishment on Student Loans to Begin

The Trump administration has announced it’s going to start garnishing wages on May 5th for student loan borrowers in default. If you’re in forbearance, you should be okay, but honestly, with this administration, nothing feels certain, and I wouldn’t be surprised by more mistakes that cost you. We’ve seen it with Social Security and now a whistleblower at the National Labor Relations Board because of Russian hacking thanks to DOGE (Department of Government Efficiency).

• Thanks to DOGE, Now is a Good Time to Freeze Your Credit

But the main point I’ve been making is about being prepared. We’re already paying more for things, maybe even bought cars because of tariffs, and now this with student loans. It can quickly max out your monthly budget, making adjustments tough. So, try to be as financially ready as possible.

• How Reciprocal Tariffs Affect Your Finances

Contact your loan servicer and try to work out a payment plan to avoid getting hit with unmanageable amounts, your wages garnished, and your credit destroyed. If you aren’t sure of which lender is servicing your student loans, please visit the federal government website for Federal Student Aid.

Another thing to remember is that if they start garnishing wages, 1099 employees are safe from that. So, depending on your job, switching to 1099 might be something to consider. However, they could still freeze bank accounts, take benefits, and even Social Security (up to 15%) to repay loans, and definitely take any tax refunds.

Now, if things get to the point of frozen bank accounts, this is something I suggested with the Social Security issues: move your money to a different bank. They’ll only know the account where your payments have been going.

Open an account at a different bank or a local credit union and put most of your money there. Then, pay your bills from that new account, but don’t pay the loan servicer from it, or they’ll find that account too. It’s a simple trick I tell my clients dealing with lawsuits from creditors. So, these are some steps you might need to take to protect yourself. Keep that in mind.

I know it’s a struggle to even reach the student loan servicers – that’s another mess with the soon-to-be disappeared Department of Education. But you have to stay on top of it to avoid surprises and wage garnishments.

Take care of yourselves, mentally and emotionally. We’re dealing with a lot right now, but it’s crucial to be informed so you can react quickly.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.