Trump administration delays plan to withhold wages for student loan borrowers in default

"The Education Department announced Friday involuntary collections on federal student loans will remain on hold as the agency finalizes new repayment plans. The shift reverses course on earlier plans to restart wage garnishments this month after a pandemic-era pause. Nicholas Kent, the department's higher education chief, said the agency is committed to helping student and parent borrowers resume regular, on-time repayment, with more clear and affordable options."

"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, Kent said in a statement. Federal student loan borrowers can have their wages garnished and their federal tax refunds withheld if they default on their loans, meaning they are at least 270 days behind on payments."

"The penalties were put on hold during the pandemic-era pause on student loan payments that the Trump administration lifted. Last spring, Trump officials said they would resume targeting tax refunds for borrowers in default. In December, officials said they would restart wage garnishment in January, with initial notices being sent to 1,000 borrowers the week of Jan. 7. Both penalties withholding wages and federal payments are being paused, according to the Friday announcement."

The Education Department has paused involuntary collections on federal student loans while finalizing new repayment plans. Wage garnishments and the Treasury Offset Program will remain on hold as the agency develops clearer and more affordable repayment options for student and parent borrowers. The department stated Administrative Wage Garnishment and tax-refund offsets will function more efficiently and fairly after planned improvements. Federal borrowers in default are those at least 270 days behind on payments. Officials previously planned to resume targeting tax refunds and restart wage garnishments this month, but the restart has been reversed and no new date was set. More than 5 million Americans were in default as of September.

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