More than 170,000 Illinois residents are behind on student loan payments and at risk of having their wages garnished now that the Trump administration has restarted collections on federal loans in default.

The federal government considers loans to be in default when a borrower hasn’t made payments for about nine months. Wage garnishment involves seizing a portion of someone’s paycheck to help cover the cost of their debt.

The action could be disastrous for borrowers who are already having a hard time making ends meet, said Sabrina Calazans, executive director of the Student Debt Crisis Center, a nonprofit focused on helping borrowers.

“This is a really, really bad time for so many folks [who] are struggling,” Calazans said, noting that these collections are intersecting with skyrocketing health care premiums, high unemployment and the increasing cost of groceries and other necessities.

“It just becomes this huge nightmare for so many families,” Calazans said.

The two groups most likely to be impacted are Black borrowers and borrowers with associate degrees, according to a fall 2025 survey by The Institute for College Access and Success.

WBEZ spoke with Calazans and another student debt expert to break down what default and wage garnishment means for borrowers and what actions people with federal student loans can take to prevent that situation — or get out of it.

Why is the federal government withholding wages from some student loan borrowers?

For almost six years, since the start of the COVID-19 pandemic, federal officials had opted not to collect on defaulted student loans. But last spring President Donald Trump’s administration announced it would resume wage garnishment in order to recoup taxpayer dollars.

That means that starting again this year, with 30 days notice, the government can work with your employer to seize up to 15% of your disposable income. Critics say the move will only worsen the financial hardships of struggling Americans without decreasing the number of people already in or headed for student loan default.

“It seems like the appropriate thing to do would be to talk to the borrower about, ‘How can I get you in a form of repayment that you can afford,’” said Alexander Lundrigan with Young Invincibles, a nonprofit that advocates for policies benefiting young Americans. “But instead of the hand, it’s the hammer. And that’s just been the approach of this administration.”

More than 5 million borrowers across the country were in default as of April 2025, and another 4 million were more than 90 days behind on payments, according to the U.S. Department of Education. That means more than a quarter of federal student loans could be put into involuntary collections this year.

What happens once I default on my student loan?

The borrower’s entire balance is due and fees get tacked on, Calazans said, which can cause the debt to balloon even more.

“It’s very overwhelming for folks,” she said.

If you go into default you should see a red warning at the top of your StudentAid.Gov dashboard. You may also receive a letter in the mail from the Education Department’s default resolution group, or the company that administers your loan may reach out by phone or email.

Once you reach 360 days of missed payments, your defaulted loans can be sent to collections and you may face wage garnishment or seizure of your federal tax refund.

Already, federal officials say they are notifying 1,000 borrowers in default this month that their wages will be garnished, and that number will ramp up in the coming months.

How do I know if I’m at risk of default?

Before default, there’s delinquency. Miss your payment deadline by just one day and your loans become delinquent, Calazans said.

Once you miss at least 90 days of payments, your delinquent status is reported to major credit bureaus. Taking out a credit card or renting an apartment or buying a home become much more difficult.

“People see their credit scores tank,” Calazans said. “It impacts all aspects of life.”

One way to prevent this is to make sure your contact information is up-to-date in both your loan servicer and Federal Student Aid accounts. That way you don’t miss important communications about payment deadlines and changes to your loan status, including notices about delinquency and default.

This is especially important right now as the federal student loan system undergoes changes and is plagued by a backlog of applications for affordable repayment plans and student loan cancellation, Calazans said.

“The communication to folks has been horrendous,” said Calazans, citing layoffs at the Education Department. “It’s really hard for people to navigate the system.”

A department spokesperson did not respond to a request for comment.

What factors could put me at a higher risk of default?

Many Americans are being pushed into default by the increasing cost of housing, food and health care, Calazans and Lundrigan say, and by the Trump administration’s whittling down of student loan repayment options like the SAVE plan, which was the most affordable plan offered.

More than 4 in 10 borrowers surveyed by The Institute For College Access and Success reported having to choose between making loan payments and covering the cost of food, housing and other basic needs.

“There’s an assumption that [people in default] are refusing to pay their student loans, which is not the case most of the time,” Lundrigan said. He said borrowers tell him: “I’m picking between my student loan payment and my rent, and I’m going to pay my rent.”

What should I do if I’m at risk of defaulting on my student loans?

If your loans are delinquent but not yet in default, Calazans advises calling MOHELA, Nelnet, or whichever company administers your loans. (Find that information here). You can request the servicer retroactively apply a forbearance or deferment to the period of time you have missed payments.

“It clears the fact that you were in delinquency, and brings you back to good standing and back to square one,” Calazans said.

You can also use the student loan simulator on the Federal Student Aid website to figure out if there’s a more affordable repayment option available based on your individual financial circumstances, Lundrigan said.

What options do I have if my student loans are already in default?

Unless you are in a position to pay off your entire loan balance and default fees, Calazans said, you should contact your loan servicer and/or the Education Department’s default resolution group as soon as possible — ideally before your loans are moved into collection.

“It’s harder to get that wheel to stop when it’s in motion,” she said.

Your two options are loan rehabilitation or consolidation.

Under the first, the default resolution group comes up with a payment amount that you must make nine times over a 10-month period to bring your loans out of default.

“It’s a lengthy process,” Calazans said. Consolidation “is a much quicker way for you to get out of default.”

By consolidating your loans, you are basically creating a new loan and putting yourself back into good standing, Calazans explained. You can then enroll in an income-driven repayment plan to get back on track.

If you pursue this route, Lundrigan said, you should try to apply and have your loans consolidated before July 1, otherwise you will lose the option to request deferment for unemployment or economic hardship.

What can I do if I receive a notice of wage garnishment?

You can appeal the decision through the federal default resolution group, Lundrigan said, but you have to do so quickly.

If granted a hearing, you will need to present evidence that you’ve recently started a new job, that the debt amount doesn’t exist or is incorrect or that wage garnishment would create extreme financial hardship. Lundrigan said this process may soon change.

Calazans still recommends reaching out to the federal default resolution group to ask about next steps. But she said some people have had trouble getting in touch with the agency.

If that’s the case, she said, Illinois residents should reach out to their student loan ombudsman or contact their representatives in Congress.

“The default resolution group is supposed to help you. This is literally their job,” Calazans said. But if that doesn’t happen, “the lawmaker’s office can intervene and be like, ‘Hey, what’s going on?’”