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Borrowers in default on their student loans received forbearance last week. The Trump administration announced Friday that it is postponing mandatory collection for the time being.
The suspension marks a change in policy, as the Education Department announced in late December that it would begin garnishing the wages of defaulters as early as early January. Over the summer, the department also reversed plans to begin garnishing Social Security payments for certain borrowers.
According to a recent estimate by the advocacy group Protect Borrowers, about 9 million people are currently behind on their education loans.
“This deferral will give borrowers a fighting chance to get their loans in good standing, enroll in more affordable repayment plans and protect their hard-earned paychecks from garnishment,” said Michele Zampini, vice president of federal policy and advocacy at the Institute for College Access and Success.
It is unclear how long collection activities will be suspended. The Department of Education did not respond to requests for comment.
In a press release announcing the suspension of foreclosures, department officials said the delay will allow them to implement recent changes to the student loan system included in President Donald Trump’s “Big, Beautiful Bill.” The legislation provides additional ways for borrowers to get out of default and overhauls repayment options.
The U.S. government typically has extraordinary recovery powers on federal debts, and can seize a borrower’s full federal tax refund and a portion of their wages, Social Security retirement benefits, and disability benefits.
According to the Congressional Research Service, more than 42 million Americans have student loans, totaling more than $1.6 trillion in debt.
Here’s what delinquent student loan debtors should do during the suspension, experts say:
File your taxes immediately
Just last week, consumer advocates warned that student loan borrowers could lose their tax refunds if they default on payments. The borrower may already be revealed.
Higher education expert Mark Kantrowitz said student loan defaulters should “immediately file a federal income tax return” to protect their potential for a tax refund.
“The IRS will begin accepting federal income tax returns on January 26,” Kantrowitz said. “Refunds are typically issued within 21 days if returns are submitted electronically.”
Get the latest information on student loans as soon as possible
Understanding your student loan status as soon as possible can also prevent the government from garnishing a portion of your paycheck or Social Security benefits when collections resume.
The Department of Education can offset up to 15% of a student loan holder’s after-tax income and apply it toward the debt. Social Security recipients can also typically have up to 15% of their monthly benefits reduced to pay off delinquent student loans.
Kyla Taylor, staff attorney at the National Consumer Law Center, said applying for loan consolidation is usually the quickest way to get out of default. Taylor said the process can be completed in as little as four weeks. However, some defaulting borrowers may be required to make several on-time payments before consolidation, and not all borrowers qualify, including those who have already consolidated their loans.
Other considerations: Loan consolidation, which involves restructuring federal student loans into new federal student loans, can also result in a loss of progress on the forgiveness schedule, depending on the repayment plan, Taylor said. President Trump’s “Big and Beautiful Bill” could also mean that borrowers will lose their current repayment options once debt consolidation is completed after June.
Another way to get out of default is through loan rehabilitation.
The Department of Education says the process involves “nine voluntary, reasonable and affordable monthly payments.” The StudentAid.gov site states that these nine payments can be made over a “period of 10 consecutive months.”
If you begin rehabilitation soon after receiving the notice of default, or if you have already made five rehabilitation payments, your loan servicer may agree to end its collection efforts against you sooner.
Find an affordable repayment plan
To avoid defaulting again, consumer advocates say you should find a student loan repayment plan that you can afford.
You can submit a request for an income-based repayment plan at StudentAid.gov. IDR plans cap monthly payments as a percentage of your discretionary income and lead to debt forgiveness after a set period of time (usually 20 or 25 years).
Kantrowitz said most borrowers are best enrolled in an income-based repayment plan (IBR). President Trump’s tax and spending package will phase out income-contingent repayment plans (ICR) and pay-as-you-earn (PAE) beginning July 1, 2028.
Starting July 1, 2026, student loan borrowers will have access to another IDR option, the Repayment Assistance Plan (RAP). This plan leads to debt forgiveness after 30 years compared to typical schedules for other plans. However, the longer term means the lowest monthly payments for some borrowers.
There are several tools available online that can help you see how much your monthly bill will be on different plans. Borrowers should be able to change their repayment plans at any time.
Borrowers in particularly tough economic times may consider options to stop payments altogether, such as economic hardship deferral or unemployment deferral.
