Overview
- The pause covers Administrative Wage Garnishment and the Treasury Offset Program, reversing plans to ramp up collections that began with notices sent the week of Jan. 7.
- Education Secretary Linda McMahon said the department has collected about $500 million to date, with no timeline given for when involuntary collections will resume.
- The overhaul stems from last year's legislation, with a Repayment Assistance Plan slated for July 1, 2026 that streamlines options, waives unpaid interest with qualifying payments, and offers another chance to rehabilitate defaulted loans.
- Roughly 5 million borrowers are in default, which can trigger up to 15% wage withholding; defaults will continue to be reported to credit bureaus despite the pause.
- Borrower advocates welcomed the relief, while the Committee for a Responsible Federal Budget criticized the move and warned it could forgo up to $5 billion a year in collections.