The Trump administration has paused its plan to resume student loan wage garnishment. This move backs away from a policy that would have hurt millions of Americans in default. The U.S. Department of Education says it will keep involuntary collections on hold while it finalizes new repayment options.
This decision reverses earlier plans. Officials had scheduled wage garnishments to restart in January 2026. Last December, they said they would send notices to 1,000 borrowers the week of January 7. In spring 2025, they also planned to seize tax refunds from defaulted borrowers. Now, both actions are on hold.
Nicholas Kent, the department’s higher education chief, explained the change. “We want collections to work more fairly,” he said. “That will happen after we fix our broken student loan system.” He added that the agency aims to help borrowers repay on time with clearer, more affordable options.
Borrowers enter default if they miss payments for 270 days or more. At that point, the government can garnish wages or take tax refunds. The pandemic pause stopped these penalties. The Trump administration ended that pause—but now it is delaying enforcement again.
As of September 2025, over 5 million Americans were in default. Millions more are behind and could default this year. Without relief, many would face sudden pay cuts during a high-cost period.
The department did not set a new date for collections. Instead, it will give borrowers time to review new repayment plans launching July 1, 2026. Congress ordered these changes last year to simplify a confusing system.
Under the new rules, new borrowers will have two choices: a standard 10-year plan or an income-driven plan. The department recently scrapped the Biden-era SAVE Plan. A federal judge had blocked it after Missouri and other states sued.
Student loan advocates praised the delay. “The original plan would have been reckless,” said Aissa Canchola Bañez of Protect Borrowers. “It could have pushed nearly 9 million defaulted borrowers deeper into debt.”
For now, the pause offers breathing room. The real test comes this summer—when new repayment plans start. Borrowers must then decide if they can afford payments without fear of garnishment. Until then, the delay in student loan wage garnishment gives everyone a chance to prepare.
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