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Student Loan Wage Garnishment Could Hit Women Hit Hardest
The U.S. Department of Education has announced that it will resume student loan wage garnishment for borrowers in default, ending a years-long reprieve that began early in the pandemic. For the first time in five years, Americans who have fallen behind on their federal student loans could see part of their paychecks seized to repay that debt. While this move affects millions of borrowers, this is likely to hit women borrowers the hardest, argues 19th News, an independent, nonprofit newsroom reporting on gender, politics and policy. Women hold the majority of outstanding student loan debt and earn less on average than men, making any wage seizure especially punishing for their finances.
Student Loan Wage Garnishment Restarts Amid Student Debt Crisis
After a lengthy pause on collections during pandemic, the government is restarting aggressive collection efforts on defaulted student loans. The Education Department’s Federal Student Aid office will resume collections on defaulted loans starting May 5, 2025. This means that borrowers who haven’t made payments in 270 days or more are again subject to penalties like withheld tax refunds, Social Security offsets, and student loan wage garnishment.
Student Loan Wage Garnishment: Women Borrowers Bear Disproportionate Loan Debt Burden
Women hold a disproportionate share of student debt, making the financial impact of student loans especially severe. Women are more likely to borrow for college and graduate school, carrying about two-thirds of the nation’s $1.6 trillion student loan debt, according to the American Association of University Women.
- Majority of student loan debt: Women hold roughly $929 billion in student debt, almost two-thirds of the country’s $1.54 trillion education debt load.
- Higher balances at graduation: Women earning a bachelor’s degree graduate with roughly $2,700 more debt on average than their male peers.
- Longer repayment timelines: Women take about two years longer than men to repay their student loans on average, partly due to the gender pay gap, according to AAUW.
- Racial disparities: Black women borrowers carry more student debt than any other group of women
Several factors drive these gaps. First, women attend college in higher numbers than men, so more women borrow for education. Secondly, upon graduating, women face a persistent gender pay gap – earning about 83 cents for every dollar men earn in the workforce. Lower income means women have less disposable income for loan payments, often resulting in slower repayment. It’s no surprise that women usually need extra time to become debt-free. As AAUW notes, many women must postpone milestones like saving for retirement or buying a home because of their student loans. In essence, the student debt crisis intertwines with the gender wage gap, leaving women in a financially precarious position.
It should also be noted that the gender pay gap may underestimate the true gap given that it doesn’t account for monetary benefits that are calculated based on a percentage of salary. These include retirement matching contributions, bonuses, and reduced Social Security benefits.
Black and Latina Borrowers May Face The Steepest Challenges Due To Student Loan Wage Garnishment
Women of color, particularly Black and Latina borrowers, are at even greater risk of harm from renewed collections and student loan wage garnishment. These groups tend to graduate with higher debt balances and lower incomes, a double bind that makes default more likely. On average, Black women borrowers have higher student loan balances than their white peers. A year after completing graduate school, Black women owed over $75,000 in loans on average, far more than white or Latina women (who owed just over $56,000).
Disparities in wealth and pay contribute to this gap: Black women working full-time are typically paid only 64 cents for every $1 paid to white, non-Hispanic men, and Latinas earn about 51 cents on that dollar, according to an analysis by the National Partnership for Women & Families. Such inequities mean women of color have fewer resources to draw on when loan bills come due.
Crucially, default data reflect these struggles. A recent survey by the Pew Charitable Trusts found that Black and Hispanic student loan borrowers are far more likely to experience default than white borrowers. About 50% of Black and 40% of Hispanic borrowers surveyed had defaulted on a student loan at some point, compared to 29% of white borrowers.
Given this data, the Department of Education’s collections efforts could potentially be interpreted as siphoning more money from the paychecks of many Black and brown women who are already struggling to build wealth. Consequently, what appears on the surface to be a simple issue of student debt collection could be reframed as a consumer protection issue and a gender equity and racial justice issue since wage garnishment could widen existing economic disparities.
The Department of Education has said it will notify student loan borrowers before initiating student loan wage garnishment, and it’s urging those in default to contact the Default Resolution Group to work out a plan . Borrowers can often rehabilitate their loans or enroll in an income-driven repayment plan to avoid the harshest consequences. That offers some hope of relief, but outreach may not reach all affected individuals in time. Ultimately, the resumption of collections on student debt, without addressing underlying issues like the gender pay gap and predatory lending, could exacerbate gender inequality.