If you’re dreading a letter telling you that your wages or tax refund will be withheld for delinquent student loans, you just got a reprieve. The Trump administration changed course and postponed involuntary collections. But this is not forgiveness; it’s a window.
Postponement is not a solution. It’s an opportunity to find one.–Steve Rhode
What just happened
On January 16, 2026, the Ministry of Education announced that it would postpone:
- Administrative wage garnishment (AWG) — take up to 15% of the available wages
- Treasury Compensation Program (TOP) — seizing tax refunds and social security
This reverses the government’s announcement in December that seizures would resume in January. The reason? New repayment plans starting in July will take time to implement.
July 1New plans available
20%From borrowers in default
Why this matters
About 8.8 million Americans – 20% of all federal student loan borrowers – are currently in default. That means they haven’t made any payments for at least 270 days. Before this delay they faced:
- Up to 15% of each garnished salary
- Confiscated tax refunds (including the larger than usual 2026 refunds)
- Social security benefits compensated
- Damage to credit score
- Problems with professional licensing in some states
The delay gives these borrowers time to explore their options before collections resume.
What’s coming in July
The ministry will launch new reimbursement options on July 1, 2026:
- Simplified plan choices (standard or income-driven)
- Waiver of interest for on-time payments (for eligible plans)
- Government matching payments in certain situations
- Second chance to repay the loan (previously one-off)
What you need to do NOW
If you default, don’t wait until July. Use this time:
- Contact your lender. Find out your exact status and options.
- Think about rehabilitation. Make nine qualifying payments to end the default and remove the default from your credit report.
- Look at consolidation. Consolidating defaulted loans can immediately remove you from default status.
- Protect your tax refund. If you are expecting a large refund, please note that collections may resume. Plan accordingly.
- Get an idea of your total debt burden. Student loans are often only part of the problem. Take the Find Your Path quiz for personal advice on all your debts.
The bigger picture
Student loan forgiveness is now taxable (as of January 1, 2026). PSLF changes are coming. The reimbursement landscape is constantly changing.
If you’re struggling with student loans AND other debt, remember: Student loans have specific rules, but credit cards, medical bills, and other unsecured debt have different options. Sometimes tackling non-student loan debt creates breathing room to deal with the rest.
Key Takeaways
- Wage garnishment and seizure of refund postponed (no end date known)
- 8.8 million borrowers in arrears will be given breathing space
- New refund options will be launched on July 1, 2026
- Second chance at rehabilitation now available
- Use this time to take action; don’t just wait
- Contact your administrator now to understand your options
Frequently asked questions
When will wage garnishment for student loans resume?
No specific date was announced. The ministry said the delay will last as long as new reimbursement options are implemented, with these options starting on July 1, 2026. After that, collections could resume, but no timeline was given.
Will my tax refund take place in 2026?
Not immediately. The Treasury Offset Program is part of the slowdown. However, if you default and collections resume later in 2026, future refunds could still be at risk. Now consider your options.
I’m at fault. What should I do now?
Contact your lender immediately. Request rehabilitation (9 qualifying payments to end default status) or consolidation (immediate termination of default status). Either option can stop collections and begin repairing your credit.
Does this mean my student loans will be forgiven?
No. This is a deferment of collection, not a forgiveness. Your loan balance is retained. Interest continues to rise. You still owe the money. This is simply a pause in enforcement while new programs are implemented.
What should I do if I have student loans AND credit card debt?
Specific rules and protections apply to student loans. Credit cards and other unsecured debt have several options, including some that can eliminate the debt completely. If you’re juggling both, look at the full picture. Sometimes tackling non-student debt first creates breathing room for the rest.
(Source: US Department of Education)
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