North Texans who’ve been struggling to keep up with their student loans could see a major change starting this month.
The Trump Administration is bringing back wage garnishments for borrowers in default, which means part of your paycheck can be taken before it reaches your hands. Garnishments were paused during the pandemic.
Texas has one of the largest student borrower populations in the country. According to Education Data Initiative, Texans owe about $131.9 billion in federal student loans, carried by roughly 3.9 million people.
With numbers this high, many families in the Dallas-Fort Worth area could see an impact once garnishments begin.
Borrowers will get a notice before anything is withheld, but the timeline to respond is short.
How does the wage garnishment process work?
A federal student loan goes into default after nine months with no payment.
Once that happens, the entire loan becomes due immediately, and the government has the legal right to ask your employer to withhold part of your paycheck.
Before anything is taken out, the Department of Education must send a written notice at least 30 days in advance. That letter will explain the debt, the amount it plans to withhold, and how you can respond.
Employers can withhold up to 15% of a borrower’s disposable income, according to federal rules.
Notices are expected to go out starting the week of Jan. 7, so borrowers in default may hear something soon.
How educated are people across North Texas?
College completion plays a major role in whether borrowers are able to repay their loans.
In Dallas County, about 34.8% of adults 25 and older have a bachelor’s degree or higher, according to the U.S. Census Bureau.
In Tarrant County, the number is about 34.5%.
Borrowers who leave college without finishing often struggle the most with loan repayments.
Educational levels look different in the northern counties.
In Denton County, where the University of North Texas is located, about 48.4% of adults hold a bachelor’s degree, according to Census QuickFacts. In Collin County, that number rises to 54.9%.
Which North Texas colleges have the highest default rates?
According to federal cohort data summarized by CollegeRaptor, Dallas College has one of the higher default rates in North Texas at about 12%. Collin College follows closely with a rate of about 10.9%.
The data shows the percentage of graduates who default on federal loans within two years of leaving school.
Four-year universities tend to have lower rates, but defaults still happen. The University of North Texas has a two-year default rate of about 7.8%. TCU’s student loan default rate is 3.5%
What should I do if I’m at risk of wage garnishment?
If you receive a garnishment notice, don’t ignore it. That notice is your chance to dispute the debt or get into a plan that stops the garnishment before it begins.
Borrowers can ask for a hearing, request their loan records, or start a voluntary repayment plan with their servicer.
The government also offers two ways to get a loan out of default.
One option is loan rehabilitation, which lets you make a series of agreed upon payments to restore the loan to good standing. Another option is loan consolidation, which rolls your overdue loan into a new one that’s considered current.
Either path can stop wage withholding once you begin the process.
Where can I get help if I’m struggling with loans?
Borrowers can log into StudentAid.gov to check their loan status and see repayment or consolidation options.
Dallas and Tarrant counties have financial empowerment centers that offer free or low-cost counseling for residents dealing with debt or credit issues.
These services can help you understand your options, catch errors in your loan records, or find a repayment plan that fits your income.
If you’re unsure whether you’re in default, the safest step is to contact your loan servicer as soon as possible.