From Campus to Classroom: Stories That Shape Education
- Department of Education pauses involuntary collections to implement repayment reforms under the Working Families Tax Cuts Act.
- New income-driven plan waives unpaid interest for borrowers with on-time payments starting July 1, 2026.
- Pause gives defaulted borrowers time to consolidate loans or complete repayment and rehabilitation agreements.
- Borrowers should check studentaid.gov to see default status and take steps to remove loans from default.
The Department of Education said it wouldn’t involuntarily collect defaulted student loan debts, about a week after it said it would.
WASHINGTON, D.C., USA — The U.S. Department of Education on Friday said it will delay wage garnishments and other involuntary collections of student loan borrowers in default, about a week after it started sending warnings to borrowers.
Officials said the temporary pause would allow the department to implement repayment reforms under the Working Families Tax Cuts Act, which was signed into law July 4. The department said the act would create an income-driven repayment plan that waives unpaid interest for borrowers with on-time payments and whose payments do not fully cover accrued interest.
These reforms, which include simplifying repayment options and providing an additional opportunity for borrowers to rehabilitate their federal student loans, reflect the Trump administration’s commitment to provide better support for current and future borrowers in repayment,” the department said in a news release. “The plan will be available for borrowers beginning July 1, 2026. The delay in collections will give defaulted borrowers additional time to evaluate these new repayment options once they consolidate their loans or complete a repayment or rehabilitation agreement.
The Trump administration began sending out notices to student loan borrowers in default on Jan. 7. Â The department is required by law to give borrowers 30 days’ notice before garnishing their wages.
An estimated 1,000 notices were sent out last week, with thousands more expected to come throughout the year. Officials did not say whether those notices would still go out or not.
“The most important thing borrowers can do before administrative wage garnishment restarts is to log into studentaid.gov to check whether their federal student loans are in default and take steps now to remove them from default,” Kyra Taylor, staff attorney at the National Consumer Law Center, told the Associated Press in August.
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