I am in the middle of hearing back from the doctoral programs I applied to this fall, which brings up all of the feelings that come with a new opportunity and an impending major life transition. Law and medical degrees, master’s degrees, and degrees awarded by for-profit institutions often require students to borrow to cover their educational expenses. I hope to receive an acceptance with full funding, including tuition and a livable-wage stipend.
For students who borrow to cover educational expenses and default, the postponement of wage garnishment and tax refunds may soon end. The Department of Education is considering reinstating administrative wage garnishment and the Treasury Offset Program (TOP) for federal student loans in default. The U.S. has 9 million borrowers in default, defined as being 270 days past due on their payments. If wage garnishment is reinstated, these borrowers could have 15% of their after-tax income garnished and tax refunds intercepted by TOP, leaving millions of Americans with less money for basic needs and savings. When TOP resumes, borrowers can lose their entire federal tax refund, including Earned Income Tax Credits and Child Tax Credits, before it reaches their bank account. One borrower reported losing a $10,000 tax refund to TOP and ending up homeless, living hotel-to-hotel as she struggled to regain financial stability.
Women attend college at higher rates than men (66% of female high school graduates enrolled in college in 2022, compared to 57% of male graduates) and complete college at higher rates (68% of women who entered four-year institutions in 2016 graduated within six years versus 61% of men), yet still make less. For women who borrowed to access education yet earn less than their male counterparts, the reinstatement of wage garnishment and TOP will deepen existing financial vulnerability.
Who’s at Risk of Garnishment?
The COVID‑era payment pause (March 2020–September 2023) and subsequent SAVE plan forbearance explain why 68–77% of Black, Hispanic, and Multiracial women report zero monthly student loan payments in the 2022 Survey of Consumer Finances data. This is the population most at risk of garnishment. And the truth is, the payments are already more than what’s affordable. Among the women who are paying, median payments are $40 – $120, even with low incomes ($3,000–$4,000), leaving little room for forced collections (see Table 1). We also see Black, Hispanic, and Multiracial women with median monthly payments taking up more of their monthly income than their male counterparts. With median liquid assets under $1,100, restarting garnishment would extract cash from households already in a post‑pause fragile state. As the Trump administration delays but plans to resume involuntary collections amid SAVE forbearance wind‑down summer 2026, these numbers show who faces the biggest shock: Black, Hispanic, and Multiracial women with high non‑payment rates, thin buffers, and stretched incomes.
Table 1. Median Monthly Student Loan Payments and Income by Race/Ethnicity, and Sex for 2022.
Emergency Fund Seized by GGov’t
Black and Hispanic women had the lowest median liquid assets in 2010 ($555 and $299, respectively) and continue to hold the lowest liquid assets in 2022 (see Table 2). Women who are multiracial or from other groups are not disaggregated in the SCF and saw a decline in median liquid assets of $136, while all other groups saw increases. While Black and Hispanic women had the highest shares of the population with zero liquid assets in 2010, in 2022, Multiracial women now lead at 4% (vs. Black women’s 3%). Student loan borrowers fall within these groups, and the reality is that garnishment hits not only individual borrowers but entire households already operating with minimal cash reserves.
Table 2. Median Liquid Assets and Share with Zero Liquid Assets by Race/Ethnicity and Sex
Black women had the highest amount of debt in 2010 at $8,518 (See Table 3). Multiracial women went from having the second-lowest amount of student debt to passing Black women in 2022 to become the group with the highest student loan debt among women at $19,771. Black and Multiracial women also have some of the lowest average incomes, where Black women earn less than 50% of Black men in 2022. Black women remain the group with the highest share of student loan debt, going from 27% to 38% in 2022, and face a high debt-to-income ratio at 41%, falling second highest to Multiracial women in 2022 at 42%. Over time, the debt burden is increasing for Black, Hispanic, and Multiracial women, showing that student loan debt compounds existing economic disadvantages for women already earning less than their male counterparts.
Table 3. Student Loan Mean Debt, Income, Debt Prevalence, and Debt-to-Income Ratio by Race, Ethnicity, and Sex
Inequity Somewhere is Inequity Everywhere.
But this is not a new policy. In fact, it comes from longstanding federal law and is used for other debts like child support and taxes, which similarly don’t require a court order. What’s different is the way this policy will interact with the COVID-era repayment pause. Yet fiscal advocates like the Committee for a Responsible Federal Budget (CRFB) argue that collections protect taxpayers from bearing the costs of default. That may be true on paper, but these burdens fall disproportionately on Black, Hispanic, and Multiracial women, which can destabilize already fragile households and increase reliance on safety net programs that taxpayers ultimately fund.
Black and Hispanic borrowers are more likely to default and experience involuntary collections, in part because of lower incomes, unstable employment, and negative or zero net worth. Treating this revenue as “”asy money”” ignores who is actually paying and how it magnifies existing racial and gender wealth gaps. Policies presented as race-neutral often amplify disadvantages that already exist within systems like debt financing. Before adopting blanket policies aimed at people who “”aren’tcompliant,” “policymakers should examine the systemic challenges faced by different groups of women and consider income-driven alternatives that account for household financial fragility. Extending income-driven repayment protections or adjusting garnishment thresholds based on liquid assets would acknowledge that having employment doesn’t mean having income to spare, especially when that income is already stretched thin by inequitable wages and mounting debt.
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Lily S. Johnson is a former research assistant. She worked on projects focused on financial well-being and menstrual health.