The Trump administration provided struggling student loan borrowers with a reprieve on Friday, announcing that it would temporarily delay forced collections, including seizing tax refunds and garnishing wages, from those who have defaulted on their loans.
The pause reverses the Education Department’s previous plan to gradually restart wage garnishment for groups of borrowers earlier this month, and provides the administration more time to complete its overhaul the student loan repayment system.
“Today’s announcement throws a lifeline to working and middle-class families who are buckling under the weight of outdated student loan policies that don’t reflect today’s high cost of living and affordability crisis,” said Abby Shafroth, managing director of advocacy at the National Consumer Law Center.
In May, after a five-year pandemic-related reprieve, the Trump administration resumed seizing tax refunds and withholding other federal benefits from borrowers in default.
Millions of student loan borrowers have been struggling to keep up with their payments in recent months while, at the same time, the student loan landscape is in a state of upheaval. Congress’s reconciliation bill last summer dismantled the current repayment program menu and created a new one. And legal challenges will soon end the Biden-era SAVE repayment plan, the most affordable repayment program.
While collections are on hold, the Education Department said it encouraged distressed borrowers to explore their options.
“The department determined that involuntary collection efforts,” including wage garnishment, “will function more efficiently and fairly after the Trump administration implements significant improvements to our broken student loan system,” Nicholas Kent, the Education Department’s under secretary, said in a statement.
It wasn’t immediately clear when collections would restart.
Tara Siegel Bernard writes about personal finance for The Times, from saving for college to paying for retirement and everything in between.
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