Borrowers who were worried that their wages could be garnished to collect student loan debt are now facing a temporary reprieve. The Trump administration is backtracking on a plan to aggressively pursue student debt repayment, though it is unclear how long the announced pause will last.
Pause on wage garnishments, income tax refund withholdings for student debt
The Department of Education on Friday “announced that it will delay the implementation of involuntary collections on federal student loans, including Administrative Wage Garnishment (AWG) and the Treasury Offset Program (TOP).” The department stated that “the temporary delay will enable the Department to implement major student loan repayment reforms” and “give defaulted borrowers additional time to evaluate these new repayment options once they consolidate their loans or complete a repayment or rehabilitation agreement.” The Trump administration and congressional Republicans have worked to restrict student loans and limit repayment options; Democrats have criticized these moves, which Republicans say are intended to streamline the loan repayment process.
As Blavity previously reported, the Trump administration was set to begin aggressive collection tactics against borrowers whose student loans were in default, including garnishing wages and withholding income tax refunds. Friday’s announcement delays those efforts, though it is unclear how long the pause will last. Nicholas Kent, Under Secretary of Education, indicated that these involuntary collection tactics will eventually be implemented. “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.”
Why did the Trump administration change course?
Advocates for student debt holders celebrated the decision to pause garnishment efforts, while commentators speculated on the motives behind the policy reversal. The National Consumer Law Center’s managing director of advocacy, Abby Shafroth, said that the pause “throws a lifeline to working and middle-class families who are buckling under the weight of outdated student loan policies that don’t reflect today’s high cost of living and affordability crisis.”
The NAACP took credit for the advocacy that it and other organizations conducted against the garnishment plan.” This is what happens when we push back together,” the organization posted.
Others saw the policy change as politically motivated. “Ahead of the midterms, Trump administration delays plans to garnish wages,” posted the PatriotTakes account. “They are worried about losing votes.”
Author and Professor Josh Cowen similarly speculated, “Somebody did an internal poll and while student debt forgiveness is unpopular, so is wage garnishment while costs and health premiums are skyrocketing in an election year.”
Regardless of the reason why the Department of Education decided to change course, this latest move relieves a potential financial burden on some of the millions of Americans holding student loan debt. The reprieve appears to be temporary for now, but how long it lasts may depend on how much political pressure can be brought to the Trump administration to change course on its debt collection plans.
