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The delay affects Administrative Wage Garnishment and the Treasury Offset Program, which allows the government to withhold federal tax refunds from borrowers who are at least 270 days behind on payments. Both penalties had been on hold since the pandemic-era pause on student loan payments began in March 2020.
The department said the delay will enable implementation of major repayment reforms mandated by the Working Families Tax Cuts Act, which simplifies repayment options and provides additional pathways for borrowers to rehabilitate defaulted loans. The new income-driven repayment plan is scheduled to launch July 1, 2026.
"After the Biden Administration misled borrowers into believing their student loans would not need to be repaid, the Trump Administration is committed to helping student and parent borrowers resume regular, on-time repayment, with more clear and affordable options," said Under Secretary of Education Nicholas Kent in a statement.
The announcement represents an abrupt reversal. In December, department officials said they would restart wage garnishment in January, with initial notices scheduled to reach 1,000 borrowers the week of Jan. 7. Last spring, the Trump administration said it would resume targeting tax refunds after lifting the pandemic-era payment pause.
More than 5 million Americans were in default on federal student loans as of September, according to department data. Nearly 10% of borrowers were delinquent by more than 90 days in the third quarter of 2025, Federal Reserve Bank of New York data shows.
The Working Families Tax Cuts Act reduces the number of federal student loan repayment plans from multiple options to two: a standard repayment plan and an income-driven plan. The new income-driven option waives unpaid interest for borrowers who make on-time payments when their monthly payment doesn't fully cover accrued interest. The plan also includes matching payments from the department in certain circumstances to ensure outstanding principal decreases each month.
The law also allows borrowers to rehabilitate a defaulted loan twice, doubling the previous single-opportunity limit. The delay in collections gives defaulted borrowers additional time to begin the rehabilitation process or consolidate their loans.
Education Secretary Linda McMahon indicated earlier last week in remarks to local reporters in Rhode Island that the department planned to pause wage garnishment efforts.
"We had an incredible falloff in people repaying their loans" during the pandemic-era pause, McMahon said.
Student loan advocates welcomed Friday's announcement.
"The delay is the right thing to do by borrowers and a smart move by the Department," said Michele Zampini, Associate Vice President for Federal Policy & Advocacy at The Institute for College Access & Success."Given the ongoing upheaval in student loan repayment options—including the impending end of the SAVE Plan and the rolling implementation of all the changes made by OBBBA—the delay will give borrowers a fighting chance at getting their loan into good standing, enrolling in a more affordable repayment plan, and protecting their hard-earned wages from garnishment."
The department encouraged borrowers in default to explore their options with their defaulted federal loan servicer, noting that it continues to report student loan defaults to credit reporting agencies.
The announcement follows last month's elimination of the SAVE Plan, an income-driven repayment option created under the Biden administration that offered lower payments and accelerated loan forgiveness. A federal judge had blocked the plan after Missouri and other states challenged it in court.
The department did not set a new date for resuming involuntary collections.
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Dr. Jamal Watson is the author of The Student Debt Crisis: America's Moral Urgency.
