Jan. 16 (UPI) — The U.S. Education Department has delayed plans to seize tax refunds and garnish wages over student loans that are in collection, it announced on Friday.
While the delay is in effect, the department will work to revise student loan repayment regulations in accordance with the One Big Beautiful Bill Act.
“The Trump Administration is committed to helping student and parent borrowers resume regular, on-time repayment with more clear and affordable options, which will support a stronger financial future for borrowers and enhance the long-term health of the federal student loan portfolio,” said Nicholas Kent, under secretary of education.
“The department determined that involuntary collection efforts, such as administrative wage garnishment and the Treasury offset program, will function more efficiently and fairly after the Trump administration implements significant improvements to our broken student loan system.”
The halt in collections will help former students and their families, while affordability has become an issue for many across the country, the National Consumer Protection Law Center said.
“Today’s announcement throws a lifeline to working and middle-class families who are buckling under the weight of outdated student loan policies that don’t reflect today’s high cost of living and affordability crisis,” said Abby Shafroth, managing director of advocacy at the National Consumer Protection Law Center.
“The administration must now take the next step and reform harsh collection practices before turning them back on,” Shafroth said.
The One Big Beautiful Bill Act reduced the number of available repayment plans for student loan borrowers and allows for the waiver of unpaid interest for those who make on-time payments.
Pausing the planned tax refund seizures and wage garnishments also gives student loan borrowers another chance to rehabilitate any defaulted loans and resume their normal payments as needed.
