{"id":24669,"date":"2026-01-16T22:10:25","date_gmt":"2026-01-16T22:10:25","guid":{"rendered":"https:\/\/finderica.com\/?p=24669"},"modified":"2026-01-16T22:10:25","modified_gmt":"2026-01-16T22:10:25","slug":"education-department-to-delay-collections-on-defaulted-student-loans","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=24669","title":{"rendered":"Education Department to delay collections on defaulted student loans"},"content":{"rendered":"
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U.S. Education Secretary Linda McMahon attends a press briefing with White House Press Secretary Karoline Leavitt (not pictured) at the White House in Washington, D.C., U.S., November 20, 2025. <\/p>\n

Evelyn Hockstein | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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The Education Department announced<\/a> on Friday that it will delay the implementation of wage garnishment and other involuntary collection efforts affecting defaulted student loan borrowers.<\/p>\n

The department said the delay affects involuntary collections on federal student loans through wage garnishments and the Treasury Offset Program, which is used to seize some or all of borrowers’ payments from the government, including tax refunds and Social Security benefits.<\/p>\n<\/div>\n

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Read more CNBC personal finance coverage<\/h2>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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“The temporary delay will enable the Department to implement major student loan repayment reforms under the Working Families Tax Cuts Act…to give borrowers more options to repay their loans,” the department said in the announcement.<\/p>\n

The Working Families Tax Cut Act is another name for President Donald Trump’s “big beautiful bill.” Among other provisions, the legislation introduced a new repayment plan and more ways to get loans out of default.<\/p>\n

The announcement comes days after Secretary of Education Linda McMahon\u00a0told reporters<\/a>\u00a0in Rhode Island that garnishments would be paused.<\/p>\n

More than 42 million Americans hold student loans, and the outstanding debt exceeds\u00a0$1.6 trillion<\/a>, according to the Congressional Research Service.<\/p>\n<\/div>\n

<\/a>Student loan collections efforts in flux<\/h2>\n
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The Trump administration\u00a0announced<\/a>\u00a0in April that it would resume collection activity on student loans starting in May. Before that announcement, collections had been paused since 2020 in response to the Covid-19 pandemic. <\/p>\n

Student loan borrowers who fail to make on-time monthly payments for more than 270 days are typically considered in default on their loans. At that point, the federal government has the right to seize up to 15% of borrowers’ after-tax wages \u2014 as well as a portion of their Social Security income and entire tax refunds, where applicable \u2014 to repay the debt. <\/p>\n

Roughly 5 million borrowers were in default and that number was expected to grow to nearly 10 million in the coming months, the Department of Education\u00a0said in April<\/a>. Around 9 million people are currently in default on their education debt, according to\u00a0a recent estimate<\/a>\u00a0by Protect Borrowers, an advocacy organization.<\/p>\n<\/div>\n

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After the initial announcement about collection efforts, the agency has changed course on the policy several times. <\/p>\n

In June, it paused the plan to garnish Social Security payments.<\/p>\n

Then in December, the department confirmed around 1,000 borrowers would receive notification of intent to garnish wages during the week of Jan. 7, with more notices to follow. <\/p>\n

On Jan. 7, Protect Borrowers\u00a0sent a letter<\/a>\u00a0to McMahon cosigned by the NAACP, American Federation of Teachers and several other organizations, urging the department to “immediately halt its plan to resume garnishment of millions of struggling borrowers’ wages.”<\/p>\n

“After months of pressure and countless horror stories from borrowers, the Trump Administration says it has abandoned plans to snatch working people’s hard-earned money directly from their paychecks simply for falling behind on their student loans,” Aissa Canchola Ba\u00f1ez, policy director at Protect Borrowers,\u00a0said in a statement<\/a>.<\/p>\n

\u2014CNBC reporter Annie Nova contributed to this report.<\/em><\/p>\n<\/div>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

U.S. Education Secretary Linda McMahon attends a press briefing with White House Press Secretary Karoline Leavitt (not pictured) at the White House in Washington, D.C., U.S., November 20, 2025. Evelyn Hockstein | Reuters The Education Department announced on Friday that it will delay the implementation of wage garnishment and other involuntary collection efforts affecting defaulted<\/p>\n","protected":false},"author":1,"featured_media":24670,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[2025,5745,2919,1836,1835,469,308],"class_list":{"0":"post-24669","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-collections","9":"tag-defaulted","10":"tag-delay","11":"tag-department","12":"tag-education","13":"tag-loans","14":"tag-student"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/24669","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24669"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/24669\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/24670"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24669"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24669"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24669"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}