Overview
- Friday’s announcement stops Administrative Wage Garnishment and the Treasury Offset Program for federal student loan defaults, with no new date set to restart collections.
- The move reverses a December plan to resume garnishments, after about 1,000 notices went out the week of Jan. 7, leaving timing uncertain for borrowers who already received notices.
- Officials say the delay allows rollout of reforms required by the Working Families Tax Cuts Act, including a streamlined system and a Repayment Assistance Plan slated for July 1, 2026, plus an additional opportunity to rehabilitate defaulted loans.
- Education Secretary Linda McMahon said the department collected roughly $500 million before the pause, and the agency will continue reporting defaults to credit bureaus.
- More than 5 million borrowers are in default, borrower advocates welcomed the pause as needed relief, and budget watchdogs such as the Committee for a Responsible Federal Budget warned of higher costs to taxpayers.