U.S. Secretary of Education Linda McMahon attends a press conference with Presidential Press Secretary Caroline Leavitt (not pictured) at the White House on November 20, 2025 in Washington, DC, USA.
Evelyn HochsteinReuter
The Department of Education announced Friday that it is delaying the implementation of wage garnishments and other involuntary collection activities that affect delinquent student loans.
The department said the delays are impacting involuntary collection of federal student loans through wage garnishments and the Treasury Offset Program, which is used to seize some or all of a borrower’s payments, such as tax refunds and Social Security benefits, from the government.
“The temporary deferral will allow the department to implement major student loan repayment reforms under the Working Families Tax Relief Act, giving borrowers more options for repaying their loans,” the department said in a statement.
The Working Families Tax Cuts Act is another name for President Donald Trump’s “Big, Beautiful Bill.” The law introduced new repayment plans and more ways to get out of loan default, among other provisions.
The announcement came days after Education Secretary Linda McMahon told reporters in Rhode Island that decorations would be suspended.
According to the Congressional Research Service, more than 42 million Americans have student loans, totaling more than $1.6 trillion in debt.
Student loan collection activities are in flux
The Trump administration announced in April that student loan collection efforts would resume in May. Prior to this announcement, collections had been suspended since 2020 in response to the Covid-19 pandemic.
Student loan borrowers are generally considered to be in loan default if they do not make their monthly payments on time for more than 270 days. At that point, the federal government has the right to seize up to 15% of the borrower’s after-tax wages to repay the debt, plus a portion of their Social Security income and tax refunds (if applicable).
The Education Ministry said in April that around 5 million people had defaulted on their loans, and that number was expected to rise to nearly 10 million in the coming months. According to a recent estimate by the advocacy group Protect Borrowers, about 9 million people are currently behind on their education loans.
After the initial announcement regarding collection efforts, the agency changed its policy several times.
In June, the government suspended its plan to garnish social security payments.
The department then confirmed in December that about 1,000 borrowers received wage garnishment notices the week of Jan. 7, with more to come.
On January 7, Protect Borrowers, joined by the NAACP, American Federation of Teachers, and several other organizations, sent a letter to McMahon calling on the department to “immediately halt its plans to resume wage garnishment for millions of struggling borrowers.”
“After months of pressure from borrowers and countless horror stories, the Trump administration has announced that it is abandoning its plan to take working people’s hard-earned money directly from their paychecks just because they default on their student loans,” Aissa Canchola Báñez, policy director at Protect Borrowers, said in a statement.
—CNBC reporter Annie Nova contributed to this report.
