The U.S. Department of Education, is Delaying Wage Garnishments and Involuntary Collections for Defaulted Student Loan Borrowers, according to a Release from the Agency on Friday. The Department said its Temporary Pause was made, to continue Streamlining the Student Loan Repayment Process, as it continues to make "Major" Reforms. "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 (R) Administration implements significant improvements to our broken student loan system," Under Secretary of Education Nicholas Kent (R) said in a Statement.
This move, for now, gives breathing room to Millions of Americans who have Struggled to Pay back their Loans. In addition to Garnishments and Collections, the Education Department said Tax Refund Seizures from the Treasury Department are also being Paused. Delinquent Student Loan Borrowers could see Wage Garnishments in February. Labeling the Move as a "Ridiculous" and "Incoherent" Political Giveaway, the Committee for a Responsible Federal Budget (CRFB) Accused the Trump Administration of "reviving and extending" Pandemic-Era Student Loan Pauses that it had Vowed to End.
"We're not in a pandemic or financial crisis or deep recession," CRFB President Maya MacGuineas wrote in a Statement. "There's no justification for emergency action on student debt, and no good reason for the President to back down on efforts to actually begin collecting debt payments again," She wrote. The Non-Partisan Nonprofit Organization, which Acts as an Independent source of Objective Policy Analysis on Issues of Fiscal Policy Impact, Alleges the U.S. could Lose up to $5 billion per year in Collection and Lead Loan Balances to Balloon.
Around 5 Million Borrowers have Defaulted on Student Loan Payments, which means they haven't Paid their Debts for at least Nine months or 270 days. When the Loan Officially enters Default, it becomes Eligible for Mandatory Collections. In a Letter earlier this month, a Coalition of Advocacy Groups, including Protect Borrowers, Demanded the Agency Halt forced Collections on Defaulted Borrowers.
Trump Administration moves to End Major Student Loan Forgiveness Plan: "We won't tolerate it" Aissa Canchola Bañez, Policy Director at Protect Borrowers, said the Administration's Plans would have been "Economically Reckless" amid concerns about Affordability. Wage Garnishment, a Legal Procedure in which a Person's Earnings are Required by Court Order to be Withheld by an Employer for the Payment of a Debt, was Scheduled to Start for Defaulted Borrowers last week.
Collections Announcements were made in 2025 after a Five-Year Pandemic Pause. Education Secretary Linda McMahon (R) has told Reporters that the Department Collected roughly $500 million from Defaulted Borrowers before the New Pause on Friday. The Announcement Friday came after McMahon said the Wage Garnishments had been "put on pause for a bit" during a Press Conference Earlier this Week, on Her Returning Education to the States Tour.
Under the Working Families Tax Cuts Act, a New Income-Driven Repayment Plan will be made Available for Borrowers on July 1st, 2026, after the Administration moved to Terminate Biden-era Plans. The Department said its Decision Friday will give Defaulted Borrowers Time to Rehabilitate their Loans in the Meantime.
As McMahon works to Dismantle the Agency she Leads, She is also eyeing the Treasury Department, as a Ppotential Landing Spot for the Student Loan Portfolio. Last Fall, Ellen Keast (R), Department of Education Press Secretary for Higher Education said: "We are evaluating ways to improve the fiscal health of the nearly $1.7 trillion student loan portfolio to safeguard the interests of both students and taxpayers."
However, the Committee for a Responsible Federal Budget (CRFB), a D.C.-based Think Tank focused on Federal Fiscal Discipline and Lowering the Deficit, called the Announcement an “incoherent political giveaway,” and said it was “beyond ridiculous” to Revive Pandemic-Era Pauses on Student Loan Collections.
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