Trump officials reportedly coming for paychecks, tax refunds, and even Social Security if you’ve defaulted on student loans. How to protect yourself

The Federal Student Aid estimates nearly $9.3 million student loan borrowers are in default, with 400,000 more added to the default rolls in the quarter ending June 30.

“Their outstanding federal student loans total $234 billion, or approximately 14% of the total $1.64 trillion federally managed portfolio as of June 2026,” the FSA wrote in a statement.

While considering their pivot, The Sun reported that the Trump Administration’s priority is to steer borrowers behind on their loan payments to installment plans and leverage the U.S. Treasury’s new Defaulted Loans Support Center to “understand the consequences of default and apply online to either rehabilitate or consolidate their loans.” The site launched in September.

Here’s what the government can legally go after

Debt experts say the federal government has multiple options when looking to collect on defaulted student loan debt.

“A defaulted federal student loan is the one debt that can be collected without a lawsuit,” Nick Avila, founder of San Diego-based United Debt Relief, told Moneywise.

For instance, the government can order an employer to withhold up to 15% of disposable pay without going to court, take a federal tax refund through the Treasury Offset Program, and offset Social Security benefits, Avila said.

It’s a little more nuanced when it comes to collecting from Social Security. Hans Goldstein, founder of the Southern California-based Retirement Literacy Foundation, highlighted the challenges the government faces when taking from retirees.

If a retired American gets $1,400 a month, 15% is $210, which leaves retirees with $1,190. Meanwhile, another person may get $800 a month, and 15% leaves them with much less, so the government can only skim $50.

Taxes, on top of that, are another pain point for collectors.

“In a given tax year, a borrower may not owe any federal income tax,” Dr. Ethan White, co-founder of Los Angeles-based White Sands Tax Services, a family-owned tax preparation company, told Moneywise. “However, a portion or all of the borrower’s federal tax refund may still be taken to satisfy a defaulted federal loan, up to the amount owed.”

Some defaulted borrowers may also rely on a tax refund to pay basic living expenses.

“Like a paycheck, a tax refund may be taken through an offset,” White said, adding that wage garnishment may take up to 15% of their disposable pay for the week. “However, garnishment must also preserve the equivalent of 30 times the federal minimum hourly wage for the week.”

That 15% limit could also protect retirees who still work part-time. Marriages may be impacted, too. If defaulted loans are in one spouse’s name, a joint refund may still be taken.

“However, the spouse who doesn’t owe the debt may be able to protect their allocated portion of the refund using Form 8379,” White said.

Form 8379 may be submitted along with the tax return or may also be submitted after the refund has been taken.

“Review this option prior to switching to separate tax filings, which may also incur additional costs,” White said.

Take these steps to protect your financial assets

To keep the government’s hands out of your pockets, be disciplined and think creatively. Make these strategies a priority when dealing with the federal government.

Safeguard your paycheck and benefits

Open every notice, because each one has a deadline to request a hearing or review, including for financial hardship, and missing that window is how people lose their options.

“Then contact the loan holder before collections start, not after,” Avila said.

Reprioritize your bills

A defaulted student loan also changes how you prioritize your bills.