Education Department to delay collections on defaulted student loans
Source: CNBC
Published Fri, Jan 16 2026 3:33 PM EST Updated 15 Min Ago
The Education Department announced on Friday that it will delay the implementation of wage garnishment and other involuntary collection efforts affecting defaulted student loan borrowers.
The department said the delay affects involuntary collections on federal student loans through wage garnishments and the Treasury Offset Program, which is used to seize some or all of borrowers’ payments from the government, including tax refunds and Social Security benefits.
“The temporary delay will enable the Department to implement major student loan repayment reforms under the Working Families Tax Cuts Act...to give borrowers more options to repay their loans,” the department said in the announcement. The Working Families Tax Cut Act is another name for President Donald Trump’s “big beautiful bill.” Among other provisions, the legislation introduced a new repayment plan and more ways to get loans out of default.
The announcement comes days after Secretary of Education Linda McMahon told reporters in Rhode Island that garnishments would be paused. More than 42 million Americans hold student loans, and the outstanding debt exceeds $1.6 trillion, according to the Congressional Research Service.
Read more: https://www.cnbc.com/2026/01/16/student-loan-collections-paused.html