Student Loan Borrowers In Default Get Extra Time To Repay As Education Department Pauses Collections – AfroTech
Student loan borrowers in default will have additional time to bring their accounts current before involuntary collections on federal loans resume.
The U.S. Department of Education announced on Thursday, Jan. 16, 2026, that it is delaying collection efforts for defaulted federal student loans, including wage garnishment and the Treasury Offset Program (TOP).
Per the news release, the temporary pause will remain in effect through July 2026, giving the Education Department more time to implement major student loan repayment reforms under the Working Families Tax Cuts Act signed in 2025. This will also provide borrowers with more time to consider the new repayment options, loan consolidation, or a rehabilitation program.
In addition to a single standard repayment plan, the reforms include a new income-driven repayment (IDR) plan that waives unpaid interest for borrowers who make on-time payments but those payments do not fully cover accrued interest. In some instances, the Department will also make small matching payments to ensure borrowers’ loan balances decrease each month. The new IDR plan will be available beginning July 1, 2026.
Borrowers can log in to StudentAid.gov to review available repayment plans and determine which options they may qualify for.
When Do Federal Student Loans Go Into Default?
As AFROTECH™ previously told you, the Education Department began sending notices to delinquent borrowers outlining its plans to resume wage garnishment on Jan. 7, 2026.
The letters marked the first communication on the matter since the pause that began during the COVID-19 pandemic.
For federal student loans, a borrower becomes delinquent the day after a missed payment. However, a loan does not enter default until 270 days of missed payments, per the Federal Student Aid website. At that time, a creditor or agency may withhold a part of an employee’s paycheck to repay a debt, typically after obtaining a court judgment, according to ADP.
“After the Biden Administration misled borrowers into believing their student loans would not need to be repaid, the Trump Administration is committed to helping student and parent borrowers resume regular, on-time repayment, with more clear and affordable options, which will support a stronger financial future for borrowers and enhance the long-term health of the federal student loan portfolio,” Under Secretary of Education Nicholas Kent said in a statement.
“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,” he added.
