Big News: The Government Pauses Collections for Student Loan Debt: No Tax Refund Seizure or Wage Garnishment for Now

Today, the Department announced that it would delay plans to involuntarily collect on defaulted federal student loans. Before the announcement, millions of borrowers were facing potential seizure of their federal tax refund this tax season, and wage garnishment notices were set to begin going out this month. 

The announcement means that borrowers should be protected from losing their tax refunds this tax season as a result of student debt. It also means that borrowers should be temporarily protected from losing a portion of their wages due to federal student loan default. Borrowers should also continue to be protected from seizure of federal Social Security benefits, as the pause on benefit seizures the Department announced last summer remains in effect. 

The Department did not specify when it will resume default collections or how long the delay will last. It did note that the delay is intended to enable the Department to implement major student loan repayment changes, including the creation of a new student loan repayment plan, called RAP, that will be made available on July 1, 2026.  We don’t yet know the details of the Department’s plans. We will share more as we learn more and will update guidance for borrowers. For now, borrowers can use the time offered by the delay in collections to take stock of their student loan situation. Borrowers in default can take action to get out of default before collection resumes. And borrowers who have fallen behind on their loans but are not yet in default can take actions to prevent default.