The pause allows rollout of revised federal repayment options.
The U.S. Department of Education (The Department) recently announced a temporary delay in involuntary collections (income-driven repayment (IDR) plan) on defaulted federal student loans, including Administrative Wage Garnishment (AWG) and Treasury Offsets Program(TOP). The pause is intended to allow time for implementation of repayment reforms under the Working Families Tax Cuts Act (The Act), which restructures repayment options and expands opportunities for loan rehabilitation.
“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,” said Under Secretary of Education Nicholas Kent.
Borrowers will have access to a simplified repayment system with standard and income-driven options, including provisions that address unpaid interest and allow a second rehabilitation opportunity for defaulted loans. During the delay, borrowers are encouraged to work with loan servicers to resolve defaults, though delinquent accounts may still be reported to credit agencies.
As the Lord Leads, Pray with Us…
- For Secretary McMahon and Under Secretary Kent as they oversee the postponement of garnishing wages for defaulted federal student loans.
- For Federal Student Aid personnel as they help borrowers navigate changes to federal loan repayment systems.
- For Education Department officials as they implement repayment and collection reforms.
Sources: Department of Education
