Federal government backs down on student loan wage garnishment, for now

Max Klaver, Miami Herald on Jan 16, 2026

By clicking submit, I authorize Arcamax and its affiliates to: (1) use, sell, and share my information for marketing purposes, including cross-context behavioral advertising, as described in our Privacy Policy , (2) add to information that I provide with other information like interests inferred from web page views, or data lawfully obtained from data brokers, such as past purchase or location data, or publicly available data, (3) contact me or enable others to contact me by email or other means with offers for different types of goods and services, and (4) retain my information while I am engaging with marketing messages that I receive and for a reasonable amount of time thereafter. I understand I can opt out at any time through an email that I receive, or by clicking here

The federal government has backed away from its plan to garnish the wages of those in default on their student loans.

In a press release Friday afternoon, the Department of Education announced it will delay involuntary collections on defaulted federal student loans. The pause is temporary, the Department said, but it will give the government time to implement “major student loan repayment reforms.”

Those reforms were passed under the One Big Beautiful Bill Act. The Department says they seek to simplify repayment by reducing the number of such plans and giving borrowers the option to choose between a single standard repayment plan or an income-driven repayment plan.

That income-driven plan will waive unpaid interest for borrowers whose payments are made on time but do not fully cover the interest accrued on their loan. The Department said in the press release that it will contribute small, monthly payment matches in some instances to reduce borrowers’ outstanding principals.

That plan will be available on July 1.

Mike Pierce, executive director of Protect Borrowers, a debtors advocacy organization, expressed skepticism about the policy change.

“The so-called reforms touted by the Education Department are a thin face-saving measure,” Pierce said. “They were passed by Congress (via the One Big Beautiful Bill Act) long before Trump announced his intent to start seizing wages and tax refunds a few weeks ago.”

Nationwide, there are nearly 9 million borrowers in default on their student loans, according to Protect Borrowers’ analysis of government data. More than a half-million of them are in Florida.

Now spared the prospect of immediate collection, the Department urged those in default to “evaluate these new repayment options once they consolidate their loans or complete a repayment or rehabilitation agreement.”

During the delay, the Department stressed, borrowers should explore their options for getting out of default as soon as possible.

_____