McMahon Pauses Planned Wage Garnishment for Student Borrowers

The administration had reportedly been preparing to notify defaulted borrowers last week that it would withhold part of their wages. It ended the pandemic-era pause on student loan repayments last summer, and has already begun seizing tax refunds from borrowers in default.

Aissa Canchola Bañez, policy director at Protect Borrowers, said Friday that the pause followed months of pressure from advocates. She called the proposed seizures economically reckless and said they risked pushing nearly 9 million defaulted borrowers further into debt. A coalition including Protect Borrowers, the American Federation of Teachers and Debt Collective sent the Education Department a letter on January 7 urging it not to proceed.

The letter described the plan as “calloused and unnecessary,” citing a nearly 1 million application backlog for income-driven repayment plans and mass layoffs at the department that, it said, had made it harder for borrowers to get assistance.

Protect Borrowers’ analysis found that 3.6 million borrowers entered default during the first year of President Donald Trump’s second term—one every nine seconds. More than 2.6 million, nearly two-thirds of those who defaulted, lived in states Trump won in the 2024 election, the group said.

Federal law allows the Education Department to withhold up to 15% of a borrower’s after-tax income to repay defaulted debt. The National Consumer Law Center said borrowers who receive a proposed garnishment notice can object and request a hearing, typically handled through a written review. The group urged recipients to act quickly to prevent an order from being sent to their employer.