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2h ago

Education Department Halts Wage Garnishment and Tax Offsets for Defaulted Student Loans

The agency says the delay lets it implement mandated repayment reforms first.

FILE - Education Secretary Linda McMahon speaks with reporters in the James Brady Press Briefing Room at the White House, Thursday, Nov. 20, 2025, in Washington. (AP Photo/Alex Brandon, File)
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President Donald Trump and Mayor-Elect of New York City Zohran Mamdani during a meeting in the Oval Office of the White House on Friday November 21, 2025.
Education Secretary Linda McMahon speaks to the crowd as protesters gather outside the Supreme Court as it hears arguments over state laws barring transgender girls and women from playing on school athletic teams, Tuesday, Jan. 13, 2026, in Washington. (AP Photo/Jose Luis Magana)

Overview

  • Temporary pause covers Administrative Wage Garnishment and the Treasury Offset Program, with no timeline for resuming collections.
  • The shift reverses January notices sent to roughly 1,000 borrowers warning of up to 15% paycheck withholding.
  • Secretary Linda McMahon said about $500 million was collected before the pause, and defaults will continue to be reported to credit bureaus.
  • Officials cite 2025 legislation requiring a streamlined system and a new income-driven Repayment Assistance Plan set to start July 1, 2026, including unpaid-interest waivers and expanded rehabilitation.
  • Roughly 4–5 million borrowers are already in default, advocacy groups praised the relief, and budget hawks warned the pause could forgo as much as $5 billion a year.