Education Department pauses tax-refund seizures and wage garnishment for defaulted loans

On Jan. 16, 2026, the Education Department said the Trump administration would temporarily pause forced collections, including seizing tax refunds and garnishing wages, for borrowers who have defaulted on their student loans.

The pause reverses the department’s plan to gradually restart wage garnishment earlier this month and, the department said, provides the administration more time to complete an overhaul of the student loan repayment system. In May, after a five-year pandemic-related reprieve, the administration resumed seizing tax refunds and withholding other federal benefits from borrowers in default.

Advocates welcomed the move; Abby Shafroth of the National Consumer Law Center said the announcement "throws a lifeline to working and middle-class families." The department encouraged distressed borrowers to explore their options. "The department determined that involuntary collection efforts," including wage garnishment, "will function more efficiently and fairly after the Trump administration implements significant improvements to our broken student loan system," said Nicholas Kent, the Education Department’s under secretary. It was not immediately clear when collections would restart.

Key Topics

Politics, Education Department, Student Loans, Wage Garnishment, Tax Refunds, Save Repayment Plan