The Trump administration has decided to delay its plans to withhold wages from federal student loan borrowers who are in default. This move provides relief for millions of Americans who were facing renewed collection actions. The Education Department announced that involuntary collections will remain paused while officials finalize new repayment plans.
Collections Pause Extended
Nicholas Kent, the department's higher education chief, stated the agency wants to help borrowers resume regular, on-time payments. He emphasized the need for clearer and more affordable repayment options. Kent made these comments in a statement quoted by the Associated Press.
He further explained that involuntary collection methods like Administrative Wage Garnishment and the Treasury Offset Program will operate more efficiently after improvements. Kent described the current student loan system as broken and in need of repair.
Borrowers Remain Protected from Penalties
Borrowers who fall behind on federal student loans by at least 270 days typically face serious consequences. These include wage garnishment and the withholding of federal tax refunds. The pandemic payment freeze temporarily paused these penalties, but the Trump administration later lifted that freeze.
Officials indicated last spring that tax refund offsets for defaulted borrowers would resume. Then in December, they signaled that wage garnishment would restart in January. Initial notices went out to about 1,000 borrowers during the week of January 7.
Millions at Risk as Plans Change
Department data reveals a troubling picture. More than five million Americans were in default on federal student loans as of September. Millions more have fallen behind on payments and risk entering default this year.
The department did not announce a new date for restarting involuntary collections. Officials say this delay gives borrowers time to evaluate repayment plans scheduled to become available starting July 1.
Repayment Overhaul Underway
Congress previously directed the Education Department to simplify repayment options. This leaves new borrowers with a standard plan or an income-based alternative. The SAVE Plan introduced under former president Joe Biden was scrapped following a legal challenge.
Student loan advocates welcomed the decision to extend the collections pause. Aissa Canchola Bañez, policy director at Protect Borrowers, called the administration's original plans economically reckless. She warned they could have pushed nearly nine million defaulted borrowers deeper into debt.
The group urged the department not to resume wage garnishment while borrowers adjust to revised repayment structures. Other advocates across the nation echoed this position.
