US EditionEducation Department to delay collections on defaulted student loans
The U.S. Department of Education paused collections on defaulted loans to implement repayment reforms, affecting over 9 million borrowers and simplifying repayment plans under new legislation.
- On Friday, the U.S. Department of Education delayed involuntary collections including Administrative Wage Garnishment and the Treasury Offset Program to finalize new repayment plans.
- The Department is pausing collections to implement changes from the Working Families Tax Cuts Act, which simplifies repayment options and adds a second chance to rehabilitate a defaulted loan.
- Earlier this month the Department began sending wage-garnishment notices to some borrowers, with about 1,000 notices sent that could deduct up to 15% of a borrower’s paycheck.
- By pausing collections the Department still allows credit reporting of defaults to continue, and officials warned borrowers’ credit scores may be harmed without a new timeline for collections.
- A new income-driven repayment option launching July 1, 2026, will waive unpaid interest for on-time payments and include small matching payments from the Department.
157 Articles
157 Articles
As student loan garnishments begin, area colleges have low default rates
By Chad FreyNewton Kansan Former college graduates who have defaulted on their federal loans started to receive garnishment notices this week — with the Trump… Login to continue reading Login Sign up for complimentary access Sign Up Now Close
US pauses student loan wage seizures amid repayment plan overhaul: What it means for 5-million defaulters
Student loan advocacy groups welcomed the pause, warning that resuming wage garnishment could have pushed millions of already defaulted borrowers deeper into financial distress.
The Trump administration delayed wage embargoes on late student loan borrowers. We give you all the details about this recent pause
Trump delays involuntary collections of unpaid student loans: 'Biden administration misled borrowers'
The Trump administration is delaying involuntary collections of unpaid student loans, the Department of Education announced Friday. Borrowers will be given more time to select a payment plan, pay off their loans, or rehabilitate their loans. TRUMP FIRST YEAR REPORT CARD: A- PROMISE KEEPER OR ‘NIGHTMARE’ FAILURE The Education Department said the delay is part of “the Trump Administration’s commitment to provide better support for current and futu…
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