Education Department Pauses Wage Garnishments, Tax Seizures for Defaulted Student Loans
The Education Department indefinitely delays wage garnishments and tax refund seizures for defaulted federal student loans, citing time to implement repayment reforms and allow rehabilitation.
Overview
The U.S. Department of Education paused administrative wage garnishment and Treasury Offset tax refund seizures to implement repayment reforms and give borrowers time to rehabilitate loans.
The pause took effect Jan. 16 after an earlier plan to begin garnishments the week of Jan. 7; the department hasn’t provided an end date or timeline for the reforms.
More than 170,000 Illinois borrowers and over five million nationwide are in default; defaults may still be reported to credit agencies and could affect mortgages and credit access.
Advocates call the pause a necessary respite while urging permanent relief; fiscal analysts warn it could cost taxpayers billions and worsen long‑term affordability and inflation pressures.
Borrowers should contact loan servicers or the Education Department’s default resolution group to pursue rehabilitation, consolidation, forbearance, or to appeal notices if collections resume.
Analysis
Center-leaning sources frame the pause as a borrower-centered relief by foregrounding financial hardship, citing advocates and consumer data, and using evaluative language (e.g., 'broken student loan system,' 'affordability crisis'). They prioritize borrower perspectives and practical guidance, while fiscal counterarguments appear as limited, quoted pushback rather than sustained editorial emphasis.
Sources (6)
FAQ
Administrative wage garnishment and Treasury Offset tax refund seizures for defaulted federal student loans have been paused indefinitely.
The pause took effect on January 16, 2026, after an earlier plan to start garnishments the week of January 7; no end date or timeline has been provided.
More than five million borrowers nationwide and over 170,000 in Illinois are in default on federal student loans.
Borrowers can contact loan servicers or the Education Department’s default resolution group for loan rehabilitation, consolidation, forbearance, or to appeal notices.
The pause allows time to implement repayment reforms under the Working Families Tax Cuts Act, including new repayment plans available July 1, 2026, and a second chance for loan rehabilitation.
History
3 sources