The move affects millions of borrowers as the department rolls out new repayment reforms.
Jonathan Roman | Staff Writer
On January 16, the Department of Education announced that it will delay the garnishment of involuntary student loan collections, which would affect millions of defaulted student loan borrowers, after a five-year pandemic pause.
The DOE, announced in a press release that it will delay “the implementation of voluntary collections on federal student loans, including administrative Wage Garnishment and the Treasury Offset program.
A Garnishment is a legal order that requires a bank employee to withhold money or property from a debtor and remit the proceeds to the creditor to repay the debt. Before the latest announcement, the DOE planned to garnish the wages of student loan borrowers who are severely behind on payments.
Roughly 5 million Americans have defaulted on student loan payments, meaning they have not paid their debts for at least nine consecutive months. Once a loan enters default, it becomes eligible for mandatory collections.
Collections on the loan are made after borrowers have been provided “sufficient notice and opportunity” to repay their loans.
In part, the delay “enables the department to implement major student loan repayment reforms under the Working Families Tax Cut Act,” adding that it would give borrowers more “options” to repay loans.
The announcement from the DOE includes a new income-driven repayment (IDR) plan “that waives unpaid interest for borrowers with on-time payments whose payments do not fully cover accrued interest and includes small matching payments form the Department in certain circumstances to ensure that outstanding principal is reduced each month”. The IDR is set to be available on July 1, 2026.
Secretary Linda McMahon continues to fulfill President Donald Trump’s campaign promise to “dismantle” the DOE as the department continues to shrink staffing in offices and attempts to distribute functions of the department to other government agencies.
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