Chapter 1: What surprise awaits federal student loan borrowers in the new year?
Some federal student loan borrowers are in for an unwelcome surprise. For Marketplace, I'm Novosafo, in for David Brancaccio. People who are in default on their federal student loans could start seeing their wages garnished in the new year.
Next week, the Department of Education plans to start sending out letters to borrowers who have missed at least nine months of payments, letting them know the government will begin taking 15% from their paychecks. Garnishments are resuming for the first time since the COVID pandemic began. Marketplace's Samantha Fields has more.
Before the pandemic, it was common for people who went into default on their federal student loans to have their wages garnished. It was one of the most effective collection tactics that the Department of Education has at its disposal.
Betsy Mayotte at the nonprofit the Institute of Student Loan Advisors says, unlike other creditors, the federal government doesn't have to go to court to start garnishing people's wages once they're in default. It can just do it. Around 5 million people are currently in default on their student loans, according to federal data, and millions more are behind on their payments.
I think there's nearly universal recognition that that 5 million could easily become 8 to 10 million in the next few months. Adam Minsky, a lawyer who works with borrowers, says lots of people are probably unaware that the years-long COVID payment pause is over and they're behind. A lot of cases, these are old loans. Borrowers may have moved, changed their address.
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Chapter 2: How does wage garnishment work for student loan defaults?
They may not be receiving notifications. And so I have a feeling that a lot of people are probably going to be surprised when they get hit with the garnishment. And it will be happening at a difficult time for many, Betsy Mayotte says, as the most affordable income-based repayment plan for student loans is going away and as enhanced subsidies for ACA health insurance expire.
I'm afraid that those things together are going to create real, real hardship, especially for low- and middle-income families. For people who are in default, she says there are options to get loans back in good standing, and they're better than a smaller paycheck. I'm Samantha Fields for Marketplace.
Meanwhile, many people struggling to pay back student loans may not realize it's become easier to discharge their debt through bankruptcy. That wasn't always the case. The Biden administration implemented some changes three years ago. A new study from the University of Utah finds the discharge success rate through bankruptcy is now at 87 percent, much higher than before the reforms.
There are reports this morning that Warner Brothers Discovery is set to reject an updated takeover bid from Paramount Skydance, set to be worth more than $100 billion. Warner wants to sell itself to Netflix instead while spinning off its cable TV assets. Paramount has launched a hostile effort.
We've been closing out 2025 by looking back at some of the biggest economic events of the year, global tariffs, the artificial intelligence boom, and this morning, the beginning of the end of the penny. President Trump this year ordered the Treasury Department to stop making the coins because it costs more than three cents to make one penny.
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Chapter 3: What options do borrowers have to avoid wage garnishment?
The U.S. Mint says it pressed the final batch last month, ending a 232-year run. Here's more on that history. My name is Steven Roach. I am the numismatist for the American Numismatic Association. I've been involved with the ANA since I was a teenager, and now I'm fortunate enough to be able to live and breathe numismatics as a profession. Numismatics is such an obscure word.
It's not one you tend to hear in someone's daily vernacular. In short, numismatics is the study of coins, paper money, things related. So if it's been used as money, there's someone who's going to specialize in it. The first coins came about for the U.S. federally in 1792 with the Coinage Act, April 2nd, 1792. But our original coinage was struck manually by a screw press.
They can make probably about 30 coins a minute, maybe 40 if you're really good. That would change in 1836 to be 100 coins a minute with steam power.
Chapter 4: How has the COVID pandemic affected student loan repayment?
Over time, advancements in technology went from 1836 to 100 coins a minute to today with hydraulic presses striking just over 700 coins a minute. When the cent was struck, beginning in 1793 for commerce, it was about the size of a half dollar. What's occurring now is happened in the past. So in 1857, the rising price of copper resulted in the Mint to find an alternative.
So they made a smaller diameter known as the reduced diameter scent. And it was a nickel copper composition, a little bit thicker than our regular scents today. But this has kind of been... A natural state of the denomination, and as time goes on, inflation increases, and you have to adapt to the current economic environment. It takes about 3.4 cents to make a cent.
Makes no sense, no pun intended. With the cent no longer being struck, it's just been suspended. So it's not demonetized. There are estimates of over a hundred billion pennies in circulation. I don't foresee them really going away anytime soon. It's something that's really going to take decades to really see the disappearing of the one cent denomination from circulation.
I'm Stephen Roach, numismatist at the American Numismatic Association based in Colorado Springs. By the way, the final pennies the U.S. Mint produced last month were auctioned off. Collectors shelled out almost $17 million for just 700 pennies. That means the face value of those coins was a mere $7. You do that math. I'm Noah Safo with the Marketplace Morning Report.
From APM, American Public Media.
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