WASHINGTON — The U.S. Department of Education has decided to temporarily halt its plans to garnish wages and seize tax refunds from student loan borrowers who are in default. This decision comes shortly after the department had indicated that it would begin sending notices to about 1,000 affected borrowers by early January.
The department announced this delay as a part of an effort to introduce “major student loan repayment reforms” in light of the tax and spending cut legislation signed by President Donald Trump in 2025. These changes are intended to “give borrowers more options to repay their loans,” providing some relief to those in default.
Details regarding the duration of this pause remain unclear from the department’s announcement. Education Secretary Linda McMahon mentioned during her Returning Education to the States Tour in Rhode Island that the wage garnishment process has been “put on pause for a bit.”
After a suspension that began during the initial stages of the COVID-19 pandemic, the agency had resumed collections on defaulted federal student loans in May. Borrowers in default could face wage garnishment, where up to 15% of their disposable income can be withheld by their employers without court proceedings, according to Federal Student Aid.
This delay also affects the Treasury Offset Program, which allows the government to collect overdue debts by intercepting income tax refunds and certain government benefits, as explained by the FSA.
Aissa Canchola Bañez, policy director for advocacy group Protect Borrowers, expressed that the Trump Administration’s decision comes after significant advocacy efforts and numerous complaints from borrowers. She stated, “after months of pressure and countless horror stories from borrowers, the Trump Administration says it has abandoned plans to snatch working people’s hard-earned money directly from their paychecks and tax refunds simply for falling behind on their student loans.”
Highlighting the economic implications, Bañez added that such plans would have been “economically reckless,” potentially exacerbating the financial struggles of nearly 9 million defaulted borrowers. Her comments were aligned with a Jan. 7 letter from Protect Borrowers and other groups urging Secretary McMahon to “immediately halt its plan to resume garnishment of millions of struggling borrowers’ wages.”
