The Trump administration has announced a postponement of its plan to initiate wage garnishments for student loan borrowers who default on their payments, a decision that spares millions of Americans from potential financial hardship.
On Friday, the Education Department revealed that involuntary collections on federal student loans will continue to be suspended while the agency works on new repayment options. This decision marks a reversal from earlier intentions to resume wage garnishments this January following a pause that was implemented during the pandemic.
Nicholas Kent, the head of the department’s higher education division, emphasized the agency’s commitment to assisting borrowers in transitioning back to regular repayment schedules with clearer and more affordable choices. He stated, “The Department determined that involuntary collection efforts such as Administrative Wage Garnishment and the Treasury Offset Program will function more efficiently and fairly after the Trump Administration implements significant improvements to our broken student loan system.”
Currently, federal student loan borrowers can face wage garnishments and have their federal tax refunds withheld if they default on their loans, defined as being at least 270 days late on payments. These punitive measures were paused during the pandemic but were set to resume following the lifting of the payment freeze by the Trump administration.
Last spring, officials announced plans to start targeting tax refunds for those in default. In December, they indicated that wage garnishments would also restart in January, with initial notifications scheduled for 1,000 borrowers during the week of January 7.
However, both enforcement actions—wage garnishment and withholding of federal payments—will remain on hold, as stated in Friday’s announcement. The department has not provided a new timeline for when involuntary collections will resume, indicating that the delay is intended to allow borrowers time to assess new repayment plans that are expected to become available on July 1.
Education Secretary Linda McMahon had hinted earlier this week about a potential pause in wage garnishment during discussions with local reporters in Rhode Island.
As of September, over 5 million Americans were in default on their federal student loans, with millions more at risk of falling into default as they struggle to keep up with payments. Data from the Federal Reserve Bank of New York revealed that nearly 10% of borrowers were more than 90 days delinquent in the third quarter of 2025.
The pause on student loan payments lasted from March 2020 until April 2023, followed by a one-year grace period during which borrowers could miss payments without facing default. The Education Department had previously announced in May its intention to resume collections.
McMahon noted that the pandemic-era pause led to a significant drop in loan repayments. The latest announcement was positively received by advocates for student loan borrowers, who had urged the department to refrain from resuming wage garnishments.
Aissa Canchola Bañez, policy director at the nonprofit Protect Borrowers, commented, “The administration’s plans would have been economically reckless and would have risked pushing nearly 9 million defaulted borrowers even further into debt.”
Last year, Congress mandated that the department revamp repayment plans, which critics argued had become overly complicated. New borrowers will be offered two options: a standard repayment plan and a plan that adjusts payments based on the borrower’s income.
Recently, the department discontinued the SAVE Plan, which was introduced under former President Joe Biden and aimed to provide lower payments and a faster route to student loan forgiveness. This plan faced legal challenges after being contested by Missouri and other states.
