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The federal government has officially resumed garnishing wages and withholding benefits from student loan borrowers after years of legal limbo.

The Trump administration has made several moves to limit repayment options and enforce collections after an extended COVID-era pause. The federal Education Department announced a proposed legal agreement to squash the Saving on a Valuable Education, or SAVE, plan in December 2025, dealing a final blow to the Biden administration's efforts to forgive or reduce the $200 billion burden of repayment on 5 million federal borrowers.

More than 7 million SAVE borrowers have been in administrative forbearance, not requiring payments, since June 2024. Interest on their debt restarted in August 2025 and the administration announced plans to resume wage garnishment on borrowers behind on payments beginning Jan. 7, according to reports.

Here's what to know about who is at risk of having money taken from their paycheck.

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In the bowels of the US Federal Reserve this summer, two of the world’s most powerful men, sporting glistening white hard hats, stood before reporters looking like students forced to work together on a group project.

Allies of Donald Trump had spent weeks trying to manufacture a scandal around ongoing renovations of the central bank’s Washington headquarters and its costs. Now here was the US president, on a rare visit, examining the project for himself.

“It looks like it’s about $3.1bn. It went up a little bit – or a lot,” Trump said, as Jerome Powell, the typically calm Fed chair, vigorously shook his head. “So the $2.7bn is now $3.1bn–”

“I’m not aware of that, Mr President,” Powell quickly interjected, as Trump pulled out a paper from his suit pocket as evidence. “I haven’t heard that from anybody at the Fed.”

The remarkable public encounter in late July was described as a “tussle”, “spar” and “feud” by news outlets and came to symbolize an extraordinary battle for control of the world’s largest economy.

Never before has a president been so publicly, and relentlessly, critical of the country’s top monetary policymaker. For decades, successive administrations have allowed the Fed, as the institution tasked with steering the US economy, to function independently, without political interference. No longer.

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Bank of America CEO Brian Moynihan says the headlines about Gen Z’s fears about AI and the job market are real.

The bank recently hired 2,000 top grads from 200,000 applications, the executive said in an interview with CBS News‘ Margaret Brennan on Face the Nation. As companies cite AI for widespread layoffs, Moynihan acknowledges that many young people feel scared and uncertain about the future.

“My advice to those kids, if you ask them if they’re worried about, they say they’re worried about—these are kids that we hire, 200,000 applications, we hire 2000 people.” Moynihan added that “if you ask them if they’re scared, they say they are. And I understand that. But I say, harness it … It’ll be your world ahead of you,” Moynihan said.

“My advice to those kids, if you ask them if they’re worried about, they say they’re worried about—these are kids that we hire, 200,000 applications, we hire 2000 people.” Moynihan added that “if you ask them if they’re scared, they say they are. And I understand that. But I say, harness it … It’ll be your world ahead of you,” Moynihan said.

Moynihan said it’s too soon to say how AI will play out in the job market, but he hopes to use efficiencies created by the technology to invest in more growth.

Moynihan said it’s too soon to say how AI will play out in the job market, but he hopes to use efficiencies created by the technology to invest in more growth.

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The food pantry at Penn State Harrisburg saw an uptick in students during the fall semester. Aimee Wheeler, who oversees the pantry, says she expects this coming semester to be just as busy.

"I expect to see even more in January and February, because students will be coming back from winter break and be stocking up," Wheeler said.

About a year ago, she said the food pantry might have had about nine visitors in a week. But lately, it's been more like nine visitors in a single day.

"We've seen more students than ever," Wheeler said.

And it's not just Penn State Harrisburg.

"We're hearing that there [is] an uptick, an increase in visits and not enough resources to go around," said Renee Houle Catazano, a vice president at Swipe Out Hunger. The national nonprofit estimates that two in five college students face food insecurity, meaning they lack consistent access to nutritious foods.

Between the uncertainty of SNAP payments due to the government shutdown and the rising cost of living, Houle Catazano said many students feel financially strained.

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Nineteen states will raise their minimum wages to ring in the new year for 2026, with most of them reaching a rate of $15 per hour or higher.

Another 49 cities and counties across the country will also be hiking their wage floors on Jan. 1, according to a breakdown by the National Employment Law Project.

Even though the federal minimum wage remains just $7.25 per hour, a majority of states now require employers to pay a higher rate. New Year’s Day is the most common time for states to implement scheduled increases to their minimum wages, thanks to cost-of-living adjustments written into state laws.

The highest state minimums will come to Washington State, at $17.13 per hour; New York, which will mandate $17 in the New York City metro area; and New Jersey, which will require $18.92 for long-term care workers.

Alaska and Florida are scheduled to raise their wage floors later in 2026, to $14 and $15, respectively. Oregon will also hike its minimum wage next summer to a rate still to be determined.

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The Trump administration will resume garnishing wages from student loan borrowers in default in early 2026, the U.S. Education Department confirmed to NPR.

The move comes after a years-long pause in wage garnishment due to the pandemic.

"We expect the first notices to be sent to approximately 1,000 defaulted borrowers the week of January 7," a department spokesperson told NPR. The spokesperson said wage garnishment notices are expected to increase on a monthly basis throughout the year.

A borrower is in default when they have not made loan payments in more than 270 days. Once that happens, the federal government can try to collect on the debt by seizing tax refunds and Social Security benefits, and also by ordering an employer to withhold up to 15% of a borrower's pay. Borrowers should receive a 30-day notice from the Education Department before this wage garnishment begins.

Betsy Mayotte, the president and founder of The Institute of Student Loan Advisors, says even though borrowers have expected this, the timing is unfortunate.

"It will coincide with the increase in health care costs for many of these defaulted borrowers," she said, referring to the premium increases for Affordable Care Act health insurance that kick in in 2026. "The two will almost certainly put significant economic strain on low and middle income borrowers."

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