Education Department to delay collections on defaulted student loans
U.S. Secretary of Education Linda McMahon attends a news conference with White House Press Secretary Karoline Leavitt (not pictured) at the White House in Washington, DC, USA, November 20, 2025.
Evelyn Hockstein | Reuters
Department of Education announced On Friday, it announced it would delay enforcement of wage garnishments and other involuntary collection efforts affecting defaulted student loan borrowers.
The department said the delay affected involuntary collections on federal student loans through wage garnishments and the Treasury Offset Program, which are used to seize some or all of borrowers’ payments from the government, including tax refunds and Social Security benefits.
“The temporary delay will allow the Department to implement major student loan repayment reforms under the Working Families Tax Cuts Act to give borrowers more options for repaying their loans,” the department announcement said. he said.
The Working Families Tax Cut Act is another name for President Donald Trump’s “big, beautiful bill.” The legislation introduced a new repayment schedule and more ways to save loans from default, among other provisions.
The announcement came just days after Minister of Education Linda McMahon. he told reporters Decorations will be discontinued in Rhode Island.
More than 42 million Americans have student loans and outstanding debt $1.6 trillionAccording to the Congressional Research Service.
Student loan collection efforts are changing rapidly
Trump administration announced In April, it announced that it would resume student loan collection activity starting in May. Prior to this announcement, collections had been suspended since 2020 due to the Covid-19 pandemic.
Student loan borrowers who have not made their monthly payments on time for more than 270 days are generally considered to be in default on their loans. At this point, the federal government has the right to seize up to 15% of borrowers’ after-tax wages to repay the debt, as well as a portion of their Social Security income and, where applicable, their entire tax refund.
The Department of Education said about 5 million borrowers are in default and that number is expected to rise to about 10 million in the coming months. said in April. According to the report, approximately 9 million people are currently in default on their education debt. a new prediction By Protection Borrowers, an advocacy organization.
Following the initial announcement about collection efforts, the agency changed its stance on the policy several times.
The plan to garnish Social Security payments was halted in June.
Later in December, the department confirmed that approximately 1,000 borrowers would receive notice of wage garnishment during the week of January 7, with more notices to follow.
Protect Debtors on January 7 sent a letter McMahon, co-signed by the NAACP, the American Federation of Teachers and several other organizations, called on the department to “immediately halt its plan to continue garnishing the wages of distressed borrowers.”
“After months of pressure and countless horror stories from borrowers, the Trump Administration announced that it is abandoning plans to take working people’s hard-earned money directly from their paychecks simply because they are behind on student loans,” said Aissa Canchola Bañez, policy director for Protecting Borrowers. he said in a statement.
— CNBC reporter Annie Nova contributed to this report.
