Last Updated: October 25, 2026 Reading Time: 9 min

If you have a defaulted federal student loan and a federal job, the rule that would reach your paycheck is federal salary offset, not wage garnishment. It's a separate process with its own notice period, its own hearing rights and its own definition of what counts as your pay. And as of today, the Education Department says Treasury offset and wage garnishment on defaulted loans are paused.

This guide walks through how a federal employee student loan default would hit your pay, what the 15% cap means in dollars, and the deadlines that start the day a notice shows up.

Where Collections Stand Today

The Education Department announced a restart of collections on defaulted loans in 2025. Its April 21, 2025 release said it would "restart the Treasury Offset Program" on May 5, 2025, with wage garnishment notices to follow later that summer.

Then it pulled back. On January 16, 2026, the Department announced it "will delay the implementation of involuntary collections on federal student loans, including Administrative Wage Garnishment (AWG) and the Treasury Offset Program (TOP)." It gave no end date. It tied the delay to the repayment changes in the Working Families Tax Cuts Act.

That pause still holds. When I checked the StudentAid.gov collections page on October 25, 2026, it said: "Collections through Treasury offset and Administrative Wage Garnishment are currently paused."

Two things to keep in mind:

  • The pause notices name wage garnishment and Treasury offset. They don't separately mention federal salary offset under 34 CFR part 31. If you ever receive a pre-offset notice, treat its deadlines as real and respond on time.
  • Restart talk is unconfirmed. Trade and news outlets reported in mid-October 2026 that Treasury may hire private collectors and that collections could restart in 2027. We found no announcement from the Education Department or Treasury confirming that. We did not verify how the pause affects credit reporting.

Why It's Salary Offset, Not Wage Garnishment

Wage garnishment is the rule most borrowers hear about. For a federal employee, it isn't the rule that applies to federal pay.

The Education Department's garnishment regulation says: "To collect by offset from the salary of a Federal employee, we use the procedures in 34 CFR part 31." Its definition of "employer" for garnishment "does not include an agency of the Federal Government" (34 CFR 34.2(e) and 34.3).

So federal pay goes through salary offset, governed by:

  • 5 U.S.C. § 5514, the federal salary offset statute
  • 34 CFR part 31, the Education Department's own salary offset rules, which cover current and former federal employees and federal retirement payments
  • 31 CFR 285.7, Treasury's centralized salary offset, which collects delinquent debts from federal salary after the creditor agency certifies it gave the required notice and hearing chance
Salary offset (federal pay) Wage garnishment (non-federal job)
Who it reaches Current and former federal employees, federal retirement payments Pay from private, state or local employers
Cap 15% of disposable pay per pay period, more only with your written consent 15% of disposable pay per pay period
Notice before it starts At least 65 days under ED's rule (34 CFR 31.3) At least 30 days (20 U.S.C. § 1095a)
Main rule 5 U.S.C. § 5514; 34 CFR part 31 20 U.S.C. § 1095a; 34 CFR part 34

One wrinkle: if you also work a second, non-federal job, that paycheck can still be garnished under the regular garnishment rules once collections resume. Garnishment is barred for 12 months if you were rehired after an involuntary separation (20 U.S.C. § 1095a).

How Much of Your Federal Pay Can Be Taken

The statute caps a salary offset at 15% of disposable pay per pay period. A bigger amount can come out of regular pay only "upon the written consent of the individual involved" (5 U.S.C. § 5514(a)(1)).

"Disposable pay" isn't your gross pay. Under the Education Department's rule (34 CFR 31.2), it's what's left after federal, state and local income taxes, Social Security and Medicare, federal retirement contributions, basic life and health insurance premiums, and other deductions required by law.

Under ED's list, optional FEGLI, allotments and similar elections aren't subtracted, so they don't shrink the base. TSP is treated differently under OPM's list, below.

TSP is the open question. OPM's definition (5 CFR 550.1103, which pulls in 5 CFR 581.105) treats TSP contributions as normal retirement contributions and subtracts them. That definition governs when Treasury runs a centralized salary offset. The Education Department's own list says "Federal retirement programs" and doesn't name TSP. I couldn't find a document saying which definition a paying office applies to an Education Department debt, so the example below shows both.

Illustrative example: GS-11 step 5, Rest of U.S.

A GS-11 step 5 in the Rest of U.S. locality earns $84,638 in 2026. That's $40.55 an hour, or $3,244.00 gross per biweekly pay period. Several deductions below are assumptions, marked as such, because they vary by person.

Line (biweekly) Amount Basis
Gross pay $3,244.00 2026 GS-11/5, Rest of U.S.
Federal income tax withholding −$330.00 Assumed (depends on your W-4)
State income tax −$162.20 Assumed 5%
Social Security (6.2%) −$193.69 Statutory rate, on pay after the pre-tax FEHB premium
Medicare (1.45%) −$45.30 Statutory rate, on pay after the pre-tax FEHB premium
FERS contribution (4.4%) −$142.74 Assumed FERS-FRAE coverage; your category can differ, so check your retirement coverage code
FEHB Self Only premium −$120.00 Assumed; paid pre-tax under premium conversion
FEGLI Basic −$13.92 Assumed: $87,000 coverage at $0.16 per $1,000
Disposable pay, TSP not subtracted $2,236.15 ED list (34 CFR 31.2)
Maximum offset at 15% $335.42 per paycheck (about $8,721 a year)
Disposable pay with 5% TSP ($162.20) subtracted $2,073.95 OPM list (5 CFR 581.105)
Maximum offset at 15% $311.09 per paycheck (about $8,088 a year)

The 15% applies to disposable pay, so the real hit is closer to 10% of gross. Yearly figures are 26 pay periods, rounded to the dollar.

The Notice and Hearing Clock

The statute sets the floor: at least 30 days' written notice, a chance to inspect the records, a chance to sign a repayment agreement, and a hearing. A hearing petition filed by the 15th day after you receive the notice stays collection (5 U.S.C. § 5514(a)(2)).

The Education Department's rule gives you more time than that floor, and it controls Education Department debts:

Step Deadline Clock starts Rule
ED sends a pre-offset notice At least 65 days before the first deduction Notice date 34 CFR 31.3(a)
Ask to inspect and copy ED's records Within 20 days Date of the notice (not the day you get it) 34 CFR 31.4(a)(1)
Ask for a hearing 65 days after the notice; if you requested records within 20 days, the later of that date or 15 days after ED makes the records available Notice date, or the date records are made available 34 CFR 31.5(a)(1)
Hearing decision Within 60 days of your request, unless you ask for a delay Your request 34 CFR 31.3(a)(12)

A late hearing request doesn't stop an offset unless you show the delay was beyond your control (34 CFR 31.5(a)(2)). If you don't ask for your records on time, ED can start the offset before sending them (34 CFR 31.4(c)).

The 15% cap has an exception. If 15% of current disposable pay can't pay off the debt, ED's notice can state an amount to take from severance pay, a lump-sum annual leave payment, a final salary check or federal retirement payments (34 CFR 31.3(a)(4)). Those aren't limited to 15%. That matters if you're about to retire or leave.

How to Stop an Offset Before It Starts

Sign a repayment agreement. ED won't start an offset if you agree in writing to repay on terms it accepts and make the first payment on time (34 CFR 31.10). The first payment is due by the latest of:

  • 7 days after the hearing decision, if you asked for a hearing on time
  • 65 days after the notice date, if you didn't ask for a hearing or your records
  • 15 days after ED makes your records available, if you asked for them on time

Request a hearing on time. You can challenge whether you owe the debt, the amount, or whether it's enforceable.

Get the loan out of default. StudentAid.gov lists three ways for Direct and FFEL loans (Perkins loans have different rehabilitation terms):

  • Rehabilitation. Agree in writing to nine voluntary, reasonable and affordable monthly payments, each made within 20 days of its due date, over 9 or 10 consecutive months. Involuntary collections can continue until you've made at least five of those payments. Check how rehabilitation affects your credit reports before you choose.
  • Consolidation. Consolidate into a Direct Consolidation Loan and either agree to an income-driven plan or make three voluntary, on-time, full monthly payments first. You can't consolidate while a wage garnishment order or court judgment is in place unless it's lifted or vacated. For Direct Consolidation Loans disbursed on or after July 1, 2026, the only income-driven option is the Repayment Assistance Plan, and parent PLUS consolidations aren't eligible for one.
  • Pay it in full.

Today, rehabilitation is a one-time option. StudentAid.gov says that beginning July 1, 2027, each loan can be rehabilitated twice over its lifetime.

Tax Refunds and Social Security Are a Separate Track

Salary offset is about your paycheck. The Treasury Offset Program is the separate route to your tax refund and certain federal benefit payments. That's one of the two collection methods the January 2026 release paused.

When it runs, two limits apply:

  • 60-day warning. Before referring a debt for tax refund offset, the creditor agency must notify you that it will be referred unless repaid within 60 days of the notice (31 CFR 285.2(d)).
  • Social Security floor. Offset of a monthly Social Security benefit is the lesser of the debt, 15% of the benefit, or the amount above $750. SSI payments are excluded (31 CFR 285.4(e)).

That Social Security rule matters mostly to retirees and SSDI recipients. A CSRS or FERS annuity is reached through the retirement-payment side of salary offset, not this rule.

What to Do This Month

  1. Find out who holds your loan. Log in to StudentAid.gov to see who services your loan and whether the Education Department holds it.
  2. Use the pause. The delay is not a waiver, and nothing we verified says when it ends. Starting now means you aren't racing a 65-day notice later.
  3. Keep your mailing address current. The Education Department's records and hearing clocks run from the notice date, not the day you receive it.
  4. Check before you pay for help. Confirm on StudentAid.gov what help is free before paying anyone.

Estimate Your Disposable Pay

Our free Federal Take-Home Pay Calculator takes your GS grade, step and locality and shows your paycheck after taxes, retirement and benefit deductions. To get close to disposable pay, set both TSP fields, Traditional and Roth, to 0% (the Education Department's list) or keep your TSP percentages (OPM's list), and leave out optional life insurance and dental or vision. Multiply the net figure by 0.15 to see the most an offset could take. It works for GS pay plans only, and it's an estimate, not the paying office's number.

Frequently Asked Questions

Can the Education Department garnish my federal paycheck?

Not through administrative wage garnishment. The Education Department's garnishment rule says it uses the salary offset procedures in 34 CFR part 31 to collect from a federal employee's salary, and it defines "employer" to exclude federal agencies. Salary offset has the same 15% cap, but different notice and hearing rules.

How much of my federal pay can be taken for a defaulted student loan?

Up to 15% of disposable pay per pay period, unless you agree in writing to more. If 15% can't cover the debt, the notice can name an amount to take from severance pay, a lump-sum annual leave payment, a final salary check or federal retirement payments, and that amount isn't capped at 15%.

How much warning do I get before a salary offset?

The Education Department must send written notice at least 65 days before the first deduction. You have 20 days from the notice date to ask for your records. Ask for a hearing within 65 days of the notice; if you requested records within those 20 days, the deadline is the later of 65 days or 15 days after ED makes the records available.

Are student loan collections happening right now?

Not through Treasury offset or wage garnishment, as of October 25, 2026. StudentAid.gov says those collections on defaulted loans are "currently paused," following the Education Department's January 16, 2026 announcement. No restart date has been announced.

Does TSP count as part of my disposable pay?

It depends on which definition applies. OPM's definition, used for Treasury's centralized salary offset, subtracts TSP contributions as normal retirement contributions. The Education Department's own rule lists federal retirement programs without naming TSP. We couldn't confirm which one a paying office uses for an Education Department debt.

Can my second, non-federal job be garnished?

It can be, once collections resume. Wage garnishment reaches pay from private, state and local employers, up to 15% of disposable pay after at least 30 days' notice. It's barred for 12 months if you were rehired after an involuntary separation.

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