The U.S. Department of Education announced Friday that it is putting a temporary pause on plans to garnish wages from federal student loan borrowers who are currently in default, offering short-term relief as major repayment changes roll out later this year.
According to the department, wage garnishment will be delayed for borrowers who have gone more than nine months without making a payment. This decision comes after defaulted borrowers were previously notified that garnishment could begin as soon as this month, with up to 15 percent of their paychecks subject to withholding.
Officials say the delay is tied to broader student loan reforms that are still being implemented. Under Secretary of Education Nicholas Kent said the administration wants to reset the repayment system before restarting involuntary collections.
“After the Biden Administration misled borrowers into believing their student loans would not need to be repaid, the Trump Administration is committed to helping student and parent borrowers resume regular, on-time repayment, with more clear and affordable options, which will support a stronger financial future for borrowers and enhance the long-term health of the federal student loan portfolio,” Kent said.
He added, “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.”
The department is waiting for student loan reforms passed in last year’s reconciliation bill to take effect over the summer. Once implemented, the number of repayment options will be reduced to two. Borrowers will choose between a standard repayment plan or a new income-driven option that adjusts monthly payments based on income and eliminates unpaid interest.
The law also expands loan rehabilitation, allowing borrowers another opportunity to bring defaulted loans back into good standing beyond the previous one-time limit.
While garnishment is on hold, the department warned that defaulted loans will still be reported to credit agencies. Borrowers are encouraged to use this window to contact their loan servicers and explore repayment options before collections resume.
