Wage garnishments are off the table for now, feds say. What Texans should know
Federal student loan borrowers who were bracing for wage garnishment got a major change of plans last month.
The U.S. Department of Education announced that it’s pausing all forced collections on defaulted federal student loans, including wage garnishment and tax refund seizures.
It’s a reversal from what the Trump administration previously said it would do, and it came just weeks after notices began going out to borrowers.
If you’ve been worried about part of your paycheck getting taken, here’s what this pause means and what to expect next.
Why did the administration decide to pause collections?
The pause is tied to new reforms rolling out under the Working Families Tax Cuts Act, according to the Department of Education.
Officials said the updates are meant to make the system easier to navigate and give borrowers more room to get out of default.
“The Department determined that involuntary collection efforts such as Administrative Wage Garnishment and the Treasury Offset Program will function more efficiently and fairly after the Trump Administration implements significant improvements to our broken student loan system,” Under Secretary of Education Nicholas Kent said in a news release.
There’s no date yet for when collections might restart, but officials said more updates will come as the new repayment system is finalized.
What if I already received a garnishment notice?
The Department of Education confirmed that forced collections won’t move forward while the pause is in effect, even if a notice was sent earlier in January.
This includes wage garnishment, tax refund seizure through the Treasury Offset Program, and collection of federal benefits like Social Security offsets.
Borrowers should still open all mail from loan servicers, since the department said updates will continue as the new repayment system rolls out.
How are people responding to the pause?
Reactions split almost immediately, with borrower advocates celebrating the decision and fiscal policy groups criticizing it.
Policy director at Protect Borrowers, Aissa Canchola Báñez, praised the move.
“The [Trump] Administration’s plans would have been economically reckless and would have risked pushing nearly 9 million defaulted borrowers even further into debt,” she said in a statement. “Earlier this month, a coalition of partners sent an urgent letter to ED urging them to do just this. We are pleased to see they have heeded our calls.”
On the other side, president of the Committee for a Responsible Federal Budget, Maya MacGuineas, sharply criticized the pause.
“We’re not in a pandemic or financial crisis or deep recession. There’s no justification for emergency action on student debt,” she said in a statement. “Not only will it increase costs to the taxpayer, but it will also actually worsen affordability challenges by allowing student loan burdens to balloon and putting upward pressure on interest rates and inflation.”
How many Texans could this impact?
Texas has one of the largest groups of borrowers in default in the country.
According to data from Protect Borrowers:
• 778,146 Texans are currently in default
• 317,146 newly entered default in 2025
• Borrowers in Texas hold more than $17 billion in defaulted federal student loan debt
Many of these borrowers were the same ones who recently received garnishment warnings when the administration signaled that collections would resume.
What should borrowers do now?
Even though garnishments are paused, it doesn’t mean you should ignore your loans.
The Department of Education recommends that borrowers in default use this time to explore their options, including:
• Consolidating their defaulted loan into a new Direct Consolidation Loan
• Entering an income-driven repayment plan once the new structure becomes available
• Starting or restarting loan rehabilitation, which the new law allows borrowers to do more than once
The agency also noted that default still affects credit reports, and servicers will continue reporting the status of borrowers’ loans.
