How to Avoid Student Loan Default & Wage Garnishment in 2025

Student loan defaults are skyrocketing. As of May 5, 2025, the Treasury Department resumed wage garnishment for borrowers in default—and the numbers are shocking. According to TransUnion, 20.5% of borrowers are now on the path to default, nearly doubling from 11% in early 2020.

In this critical moment, LoanSense CEO Catalina Kaiyoorawongs addresses the rising panic and confusion among borrowers. Based on the calls and concerns we’ve received, this blog breaks down exactly what you need to know and do to avoid default, protect your income, and regain financial control.Why Are So Many Borrowers Defaulting?

Even borrowers who’ve submitted income-driven repayment (IDR) paperwork are being marked as delinquent due to servicer inaction and backlogs. Catalina explains:

"Borrowers are doing the right thing—enrolling in IDR plans—but servicers aren't responsive. As a result, they're getting hit with late payments and credit damage."

The Department of Education has experienced a 50% staffing cut, leaving studentaid.gov overwhelmed and unresponsive. Submitting IDR forms there can leave you with no paper trail—and no evidence you complied. This is a direct path to default.What Happens in Default?
Default isn’t just a bad credit score. Once you’re in default, the government can:

• Garnish wages
• Seize your tax return
• Offset Social Security or disability income

And if you default, you lose access to forgiveness programs like IDR forgiveness and Public Service Loan Forgiveness (PSLF). Case Study: When the System Fails You
Catalina shared a heartbreaking story featured on CBS News. A stay-at-home mom tried calling the Department of Education to get an affordable payment. Her servicer offered her an unaffordable amount based on her household income—despite her own income being $0.

"If she had filed taxes separately, her husband’s income wouldn’t count. She should have had a $0 payment that counts toward forgiveness. Instead, she’s facing default."

This borrower’s story highlights the crucial importance of submitting documentation with the right strategy, not just calling a servicer and hoping for help.
What You Should Never Do

• Never rely solely on studentaid.gov – it doesn’t generate a paper trail
• Never accept a servicer’s payment quote without verifying your income options
• Never submit IDR info without retaining your own copy

What You Should Definitely Do

1. Submit your IDR paperwork directly to your servicer—through written communication
2. Use your lowest eligible income from the past three years
3. Create a paper trail and record of all correspondence
4. Consider filing taxes separately if you're married
5. Don’t wait until you’re in default—proactive steps matter

How LoanSense Can Help
LoanSense helps you:

• Submit income-driven repayment plans directly to servicers
• Generate and store your paper trail
• Strategize your proof of income submission
• Navigate borrower defense and PSLF enrollment

"We help borrowers avoid wage garnishment, protect their credit, and qualify for programs they often don’t realize exist."

If you’re:

• Receiving unaffordable payment quotes
• Facing default or already in it
• Getting no help from your servicer

…LoanSense is ready to help you file the right paperwork and avoid costly mistakes.

Next Steps
Upload your loan data today and get connected with a LoanSense advisor. Schedule a free call to explore borrower defense eligibility. Learn how to qualify for $0 payments that still count toward forgiveness.

Start here to protect your income  https://bit.ly/LSBD_QuickCall