U.S. Secretary of Education Linda McMahon showcases selected patriotic works by elementary school students and recent work by high school students in a special installation set up at Exeter-West Greenwich Regional Middle and High School in Rhode Island on Monday, January 12, 2026. (Photo by Alexander Castro/Rhode Island Current)
WASHINGTON — The U.S. Department of Education is backing off plans for now to raise wages and seize tax refunds from student loan borrowers, it announced Friday.
Less than a month after the agency said it would begin garnishing wages in the first full week of January by sending notices to about 1,000 delinquent borrowers, the department he said that the ephemeral delay would allow him to implement “important student loan repayment reforms” as part of the Republican tax and spending cuts bill that President Donald Trump signed into law in 2025.
A delay “would give borrowers more options to repay their loans,” the department said.
The statement did not immediately indicate how long the break would last.
– announced Secretary of Education Linda McMahon earlier this week while Rhode Island the “Back to Education Stateside” portion of her tour stated that salary allocations “have been paused for a while.”
The agency has resumed collections for outstanding federal student loans in May, after a break that began in the first weeks of the Covid-19 pandemic.
Under the law, a borrower can have his or her wages garnished as a result of defaulting on a loan, and a borrower can order an employer to withhold up to 15% of his or her disposable wages to recover an outstanding debt without having to go to court, according to Federal student aidheadquarters of the Education Department.
The delay also affects the Treasury Offset Program, which “allows the federal government to collect refunds of income taxes and certain government benefits (for example, Social Security benefits) from individuals who owe debts to the federal government.” FSA.
Aissa Canchola Bañez, policy director of the advocacy group Protect Borrowers, said in a statement Friday that “after months of pressure and countless horror stories from borrowers, the Trump administration says it has abandoned plans to yank working people’s hard-earned money directly from their paychecks and tax refunds simply for defaulting on their student loans.”
“In the face of a growing affordability crisis, the administration’s plans would be economically reckless and risk pushing nearly 9 million indebted borrowers into debt,” she added, pointing to Letter from January 7 from Protect Borrowers and other organizations calling on McMahon to “immediately halt his plan to resume garnishing millions of wages from struggling borrowers.”
