Millions of borrowers defaulting on their student loans got a reprieve Friday: The government said it would delay aggressive efforts to collect the debt, including seizing paychecks and income tax refunds.
The Education Department’s announcement did not specify how long the “temporary delay” in compulsory collection would last, but said the delay would give the department time to overhaul the student loan program and give delinquent borrowers time to explore options.
The department did not immediately respond to a request for further details.
The abrupt change, a week and a half before tax filing season begins on Jan. 26, was announced amid growing concerns about the impact of withdrawing money from borrowers already struggling with high costs of living and an uncertain job market.
Abby Shafroth, executive director of advocacy at the National Consumer Law Center, said in an email Friday that the delay is “good news for struggling borrowers” that they can use to take steps to get back into active repayment.
The center and other student borrower advocates had warned delinquent borrowers to call a special number to find out if their tax refund was flagged for seizure.
After a pause that began in March 2020 due to the Covid-19 pandemic, federal student loan collections resumed on May 5. The government said in December that it would begin notifying affected borrowers about payroll deductions this month, although it is unclear whether this actually happened.
During a visit to Rhode Island this week, Education Secretary Linda McMahon said wage garnishments had been suspended. “Well, actually there’s a pause right now,” she said in response to a reporter’s question about whether wage garnishment could make it harder for borrowers to repay their debts.
What does the delay mean for delinquent borrowers expecting a refund?
It looks like delinquent borrowers “should be free” for this tax season, Ms. Shafroth said, but it depends on when the government removes the names of delinquent borrowers who may already be on its list of taxpayers facing repayment seizures.
Why is the state accepting tax refunds for defaulted student loans?
The Education Department can ask the Treasury Department, which oversees the Internal Revenue Service, to intercept or offset tax refunds to help repay student loans that have fallen into default. (Federal loans are typically considered delinquent after nine months of missed payments, but it may take longer for collection to begin.) The government’s authority to collect on defaulted loans is not time-limited.
The government may withhold all or part of your refund, including any refundable tax credits. This can continue every year until your debt is paid off. Among all taxpayers, the average refund is about $3,000.
Because tax collections resumed late in last year’s income tax filing season, relatively few student loan borrowers’ refunds were seized in 2025, said Persis Yu, deputy executive director at Protect Borrowers, an advocacy group. But with nearly 10 million borrowers in default, many more were expected to be seized this tax season until the Trump administration backed down.
Can the state get money from other payments, such as B. Social Security checks?
Yes. While up to 15 percent of a Social Security check can be confiscated, the Trump administration has also held off on doing so on defaulted student loans.
Would the government notify me when my tax refund is imminent?
The Federal Student Aid website states that the government will send a notice to your last known address informing you that a seizure is scheduled to begin in 65 days. Within this period, you can take steps to resume payments and get out of default.
However, many borrowers may have been notified years ago, before the coronavirus relief pause. If you had forgotten or misplaced the notice, you probably wouldn’t have received another one, borrower representatives say. (It’s always a good idea to update your contact information with your loan servicer, said Adam Minsky, an attorney specializing in student loans.)
How do I find out if I am on the refund garnishment list?
Given the delay announced Friday, it’s probably unnecessary now to check whether you’re on the list for tax refund seizure, Ms. Yu said. But if you’re worried, she said, it’s not a bad idea because it only takes a few minutes and “sometimes things go wrong.”
To do this, call the Treasury Offset Program hotline at 800-304-3107. The system will ask you to enter your Social Security number to check whether your name is on the list and, if so, which department referred you to debt collection. If the Department of Education has forwarded your debt, you are likely in default on your student loans, according to the National Consumer Law Center.
Some borrowers who are current on their payments have reported seeing an incorrect “default” notation when logging into their student loan dashboard. If that happens, contact your loan servicer, said Robyn Smith, a senior attorney at the Legal Aid Foundation in Los Angeles who works with student borrowers.
How can I prevent my paycheck or tax refund from being confiscated in the future?
The easiest way is to bring your loans out of default and into active repayment status. (You can also pay off the loan in full if you are able, but few people can afford that.)
The main options are consolidation, which involves making nine monthly payments on time, or consolidation, which involves taking out a new loan to pay off old debts. Each has advantages and disadvantages.
Consolidation is quicker – you can apply online and usually takes four to six weeks. However, the default value will remain on your credit report. And if you’re working toward loan forgiveness through an income-driven repayment plan, there’s one big downside, Ms. Smith said: You’ll likely lose time you earned for canceling pre-consolidation payments.
Ms Smith said defaulted loans may need to be manually entered into the consolidation application rather than being automatically included. Double-check, she said, to make sure all of your loans are included.
“People have barriers even when they want to do the right thing,” she said.
Remediation will take longer, but the late payment will be erased from your credit history (although the record of late payments will remain). Typically, you have to call to apply, Ms. Smith said, and borrowers can expect long wait times. The point of contact for defaulted federal loans is typically the Department of Education’s Default Resolution Group, operated by Maximus Federal Services (800-621-3115 or visit MyEdDebt.ed.gov).
When consolidating or rehabilitating, you can apply for an income-driven repayment plan, which can make your monthly bill more affordable. There are nuances to each option and eligibility varies. Try the online government loan simulator to help you choose.