WASHINGTON — The U.S. Department of Education announced a temporary halt on plans to garnish wages and seize tax refunds from defaulted student loan borrowers. Initially intended to begin in January for about 1,000 borrowers, the department now plans a pause to implement significant student loan repayment reforms following the tax and spending cut bill signed by President Donald Trump in 2025. This delay aims to offer borrowers more repayment options.
Uncertainty surrounds the duration of this pause. Education Secretary Linda McMahon indicated during the Rhode Island segment of her Returning Education to the States Tour that wage garnishment has been “put on pause for a bit.” The collections for defaulted federal student loans had resumed in May after a COVID-19-induced hiatus.
Wage garnishment, as explained by Federal Student Aid, allows a loanholder to demand up to 15% of a borrower’s disposable income without court action. The delay also affects the Treasury Offset Program, which collects tax refunds and government benefits for federal debts, according to FSA.
Aissa Canchola Bañez, policy director for Protect Borrowers, stated that the administration’s decision came after significant pressure and borrower testimonies. She criticized the plan as economically reckless, potentially worsening the debt of nearly 9 million defaulted borrowers. Protect Borrowers, in a recent letter, urged McMahon to cease garnishment plans for struggling borrowers.
—
Read More Montana News
