Student-loan borrowers in default might not face smaller paychecks — yet.
Education Sec. Linda McMahon told reporters at a visit to a Rhode Island school earlier this week that wage garnishment for defaulted student-loan borrowers has been put on pause.
When asked by a reporter how the garnishment would impact borrowers, McMahon responded: “Well, actually, there is a pause.”
“We’ve now collected about $500 million,” McMahon said. “The next phase to go into a place was garnishment, and that’s been put on pause for a bit.”
The Department of Education did not make a formal announcement on this pause and did not immediately respond to a request for comment from Business Insider.
It follows an announcement from the department in December saying that it would begin sending wage garnishment notices to about 1,000 defaulted borrowers in early January, with the intent to increase the scale of those notices each month.
In May, the department resumed collections on defaulted student loans after a five-year pause. Defaulting on student loans, which typically happens after 270 days of missed payments, can have significant consequences in addition to wage garnishment, including seizure of federal benefits like Social Security and tax refunds.
Aissa Canchola Bañez, policy director at advocacy group Protect Borrowers, said in a statement that the administration’s plans to garnish wages “would have been economically reckless and would have risked pushing nearly 9 million defaulted borrowers even further into debt.”
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