"Around the time it was set to take effect in early January, President Donald Trump's Department of Education announced that it was pausing wage garnishment and tax refund seizures for defaulted student-loan borrowers. This givesborrowers behind on payments more time to find a way back to good standing, but it's unclear how much time they'll have. As to when that pause will lift, not even servicers appear to know."
"While the pause is good news for borrowers and provides them with relief as tax season commences, student-loan forgiveness backlogs continue to weigh on the thousands waiting for their relief to be processed. A recent court filing from the Department of Education said that 734,221 income-driven repayment applications were pending as of December 31, 2025, and that 3,400 discharges wereapproved in December."
The Department of Education paused wage garnishment and tax-refund seizures for defaulted student-loan borrowers, temporarily halting collections through paychecks and seized refunds. Servicers received late communications about the pause and lack clear information on when garnishments and treasury offsets will resume. A court filing reported 734,221 income-driven repayment applications pending as of December 31, 2025, with only 3,400 discharges approved in December. Litigation over the SAVE income-driven repayment plan is preventing processing of some debt-relief applications, contributing to the backlog. The uncertainty and processing delays are making financial planning difficult for many borrowers.
Read at Business Insider
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