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Student loan borrowers in default got a reprieve last week: The Trump administration said Friday it would postpone forced collections, for now.
The pause is an about-face for the U.S. Department of Education, which had announced in late December that it would start seizing defaulted borrowers’ paychecks as soon as early January. Over the summer, the department also walked back its plan to begin garnishing certain borrowers’ Social Security payments.
Around 9 million people are currently in default on their education debt, according to a recent estimate by Protect Borrowers, an advocacy organization.
“The delay will give borrowers a fighting chance at getting their loan into good standing, enrolling in a more affordable repayment plan and protecting their hard-earned wages from garnishment,” said Michele Zampini, associate vice president of federal policy and advocacy at The Institute for College Access & Success.
It’s unclear how long collection activity will be paused. The Education Department did not immediately respond to a request for comment.
Department officials, in their press release announcing the stay on garnishments, said the delay will allow them to implement recent changes to the student loan system included in President Donald Trump’s “big beautiful bill.” That law offers borrowers additional ways to get out of default and overhauls repayment options.
Usually, the U.S. government has extraordinary collection powers on federal debts, and it can seize borrowers’ entire federal tax refunds, and portions of their wages and Social Security retirement and disability benefits.
More than 42 million Americans hold student loans, and the outstanding debt exceeds $1.6 trillion, according to the Congressional Research Service.
Here’s what defaulted student loan borrowers should do during the pause on collections, experts say.
File your taxes ‘immediately’
Just last week, consumer advocates were warning that student loan borrowers could lose their tax refund if they’re behind on their payments. Borrowers may now be in the clear.
To protect any possible tax refund, defaulted student loan borrowers ought to “file their federal income tax returns immediately,” said higher education expert Mark Kantrowitz.
“The IRS starts accepting federal income tax returns on January 26,” Kantrowitz said. “If the return is filed electronically, they typically issue refunds within 21 days.”
Get current on your student loans ASAP
Getting current on your student loans as soon as possible will also stop the government from seizing a part of your wages or Social Security benefits when collections resume.
The Education Department can offset up to 15% of a student loan holder’s after-tax income to put toward their debt. Social Security recipients can also typically see up to 15% of their monthly benefit reduced to pay back their defaulted student debt.
Applying for a loan consolidation is usually the fastest way to get out of default, said Kyra Taylor, a staff attorney at the National Consumer Law Center. The process can be completed in as little as four weeks, Taylor said. But some defaulted borrowers may be required to make several on-time payments before they can consolidate, and not all borrowers will qualify, including some who’ve already consolidated their loans.
Other things to consider: Consolidating your loans, which involves repackaging your federal student debts into a new federal student loan, can also lead you to lose progress on your forgiveness timeline under some repayment plans, Taylor said. Borrowers may also lose out on current repayment options if the consolidation wraps up after June, due to Trump’s “big beautiful bill.”
Another way to get out of default is through a loan rehabilitation.
That process involves making “nine voluntary, reasonable and affordable monthly payments,” according to the U.S. Department of Education. Those nine payments can be made over “a period of 10 consecutive months,” it notes on the StudentAid.gov site.
Your loan servicer may agree to end collection activity against you sooner if you start rehabilitation not long after receiving a notice of default or if you’ve already made five rehabilitation payments.
Find an affordable repayment plan
To avoid falling back into default, find a student loan repayment plan you can afford, consumer advocates say.
You can submit a request for an income-driven repayment plan at StudentAid.gov. IDR plans cap your monthly payments at a share of your discretionary income and lead to debt forgiveness after a certain period, typically 20 years or 25 years.
Most borrowers will be best off enrolling in the Income-Based Repayment plan, or IBR, Kantrowitz said. Trump’s tax and spending package phases out the Income-Contingent Repayment plan, or ICR, and the Pay as You Earn plan, or PAYE, as of July 1, 2028.
Starting July 1, 2026, student loan borrowers will have access to another IDR option, the “Repayment Assistance Plan,” or RAP. That plan leads to debt forgiveness after 30 years, compared with the typical timeline on other plans. But it will offer the lowest monthly bill for some borrowers due to its longer term.
There are several tools available online to help you determine how much your monthly bill would be under different plans. Borrowers should be able to move between repayment plans at any time.
Borrowers in especially difficult financial circumstances can look into options to pause their payments altogether, such as through the economic hardship deferment or unemployment deferment.
