Education Department Pauses Wage Garnishment for Defaulted Student Loan Borrowers

Core Insights - The Department of Education has decided to pause wage garnishments for defaulted federal student loan borrowers, reversing its previous plan to start cutting wages in early February [1][7]. Group 1: Wage Garnishment Policy - The Department of Education announced that it will not implement wage garnishments for defaulted borrowers at this time, allowing borrowers more time to manage their payments [1][4]. - The delay in wage garnishments is intended to facilitate changes to repayment plans under the 'One Big Beautiful Bill,' including a new income-driven repayment plan set to launch on July 1, 2026 [2]. Group 2: Borrower Impact - Approximately 9 million borrowers are currently in default, having missed payments for over 270 days, and many have struggled to resume payments after the COVID-19 pandemic pause [6]. - The pause in wage garnishments is expected to alleviate financial pressure on borrowers who were anticipating income cuts, which could complicate their budgeting and repayment efforts [4]. Group 3: Future Plans - The Department of Education had previously indicated that it would begin sending notices to borrowers about wage cuts of up to 15% starting in early February, but the timeline for these garnishments is now uncertain [5][6]. - The Department began collections on defaulted loans in early 2025, reaching out to borrowers to inform them of repayment options [3].