{"id":40310,"date":"2026-01-20T17:08:01","date_gmt":"2026-01-20T17:08:01","guid":{"rendered":"https:\/\/financialrush.com\/?p=40310"},"modified":"2026-01-20T17:08:01","modified_gmt":"2026-01-20T17:08:01","slug":"student-loan-borrowers-get-more-time-after-trump-delay-on-collections","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=40310","title":{"rendered":"Student loan borrowers get more time after Trump delay on collections"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"RegularArticle-ArticleBody-5\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<div class=\"InlineImage-imageEmbed\" id=\"ArticleBody-InlineImage-108254210\" data-test=\"InlineImage\">\n<div class=\"InlineImage-wrapper\">\n<div>\n<p>Halfpoint Images | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p><a href=\"https:\/\/www.cnbc.com\/student-loans\/\">Student loan borrowers<\/a> in default got <a href=\"https:\/\/www.cnbc.com\/2026\/01\/16\/student-loan-collections-paused.html\">a reprieve last week<\/a>: The Trump administration said Friday it would <a href=\"https:\/\/www.ed.gov\/about\/news\/press-release\/us-department-of-education-delays-involuntary-collections-amid-ongoing-student-loan-repayment-improvements\" target=\"_blank\">postpone forced collections<\/a>, for now. <\/p>\n<p>The pause is an about-face for the U.S. Department of Education, which had <a href=\"https:\/\/www.cnbc.com\/2025\/12\/23\/student-loan-borrowers-wage-garnishment.html\">announced<\/a> in late December that it would start seizing defaulted borrowers\u2019 paychecks as soon as early January. Over the summer, the department also <a href=\"https:\/\/www.cnbc.com\/2025\/06\/02\/trump-pauses-social-security-benefit-cuts-over-defaulted-student-loans.html\">walked back<\/a> its plan to begin garnishing certain borrowers\u2019 Social Security payments. <\/p>\n<p>Around 9 million people are currently in default on their education debt, according to\u00a0<a href=\"https:\/\/protectborrowers.org\/wp-content\/uploads\/2026\/01\/For-Transmittal-01.07.2026-Coalition-Letter-Urging-Secretary-McMahon-to-Halt-Plan-to-Resume-AWG.pdf\" target=\"_blank\">a recent estimate<\/a>\u00a0by Protect Borrowers, an advocacy organization.<\/p>\n<p>\u201cThe delay will give borrowers a fighting chance at getting their loan into good standing, enrolling in a more affordable repayment plan and protecting their hard-earned wages from garnishment,\u201d said Michele Zampini, associate vice president of federal policy and advocacy at The Institute for College Access & Success. <\/p>\n<p>It\u2019s unclear how long collection activity will be paused. The Education Department did not immediately respond to a request for comment.<\/p>\n<p>Department officials, in their press release announcing the stay on garnishments, said the delay will allow them to implement recent changes to the student loan system included in President Donald Trump\u2019s \u201cbig beautiful bill.\u201d That law offers borrowers additional ways to get out of default and overhauls repayment options. <\/p>\n<\/div>\n<div class=\"group\">\n<div class=\"RelatedContent-relatedContent\" id=\"RegularArticle-RelatedContent-1\">\n<div class=\"RelatedContent-container\">\n<div class=\"RelatedContent-nonCollapsibleContent\">\n<h2 id=\"read-more-cnbc-personal-finance-coverage\" class=\"RelatedContent-header\">Read more CNBC personal finance coverage<\/h2>\n<div class=\"group\">\n<ul>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/18\/big-beautiful-bill-senior-deduction.html\">Senior \u2018bonus\u2019 is a \u2018valuable opportunity,\u2019 CPA says: How to make the most of it<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/17\/retirees-emergency-savings.html\">Unexpected expenses take 10% of retirees\u2019 income, on average, research shows<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/16\/employers-focusing-more-on-employee-financial-wellbeing-study-shows.html\">More employers worry about workers\u2019 financial wellbeing, research shows<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/16\/child-and-dependent-care-tax-credit.html\">Republicans want to end the \u2018marriage penalty\u2019 for this childcare tax credit<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/16\/student-loan-collections-paused.html\">Education Department to delay collections on defaulted student loans<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/15\/trump-direct-payments-health-care.html\">Trump pitches direct payments for health care. What policy experts say about it<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/15\/four-year-college-loses-ground-community-college-gains-steam.html\">Students forgo four-year degrees in favor of community college, certificate programs<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/15\/student-loan-forgiveness-repayment-plan-backlog.html\">Over 800,000 student loan borrowers in backlog for forgiveness, repayment plans<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/15\/underwater-car-trade-ins.html\">Underwater car trade-ins are on the rise \u2014 and drivers owe a record amount<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/15\/fourth-quarter-estimated-tax-deadline.html\">This IRS deadline is a \u2018chance to catch up\u2019 on your 2025 taxes, expert says<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/15\/states-auto-ira-retirement-programs.html\">Workers have $2.75 billion saved in state-run retirement accounts \u2014 what to know<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/14\/what-a-missed-payment-does-to-your-credit-score.html\">More Americans expect to miss a debt payment: What that does to your credit score<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/14\/student-loans-default-tax-refunds-garnishment.html\">Student loan borrowers in default may miss Trump\u2019s \u2018largest tax refund season\u2019<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/14\/irs-budget-cut-2026.html\">IRS could see modest budget cut as Congress proposes funding plans<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2026\/01\/13\/enhanced-aca-subsidies-lapse-uninsured.html\">As enhanced ACA subsidies lapse, millions poised to drop health insurance<\/a><\/li>\n<li><a href=\"https:\/\/www.cnbc.com\/2025\/10\/01\/best-financial-advisors.html\">CNBC\u2019s Financial Advisor 100: Best financial advisors, top firms ranked<\/a><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Usually, the U.S. government has extraordinary collection powers on federal debts, and it can seize borrowers\u2019\u00a0<a href=\"https:\/\/www.cnbc.com\/2019\/04\/23\/more-student-loan-borrowers-are-getting-their-tax-refunds-seized.html\">entire federal\u00a0tax refunds<\/a>, and portions of their\u00a0<a href=\"https:\/\/studentaid.gov\/help-center\/answers\/article\/what-is-wage-garnishment\" target=\"_blank\">wages<\/a> and\u00a0<a href=\"https:\/\/www.consumerfinance.gov\/data-research\/research-reports\/issue-spotlight-social-security-offsets-and-defaulted-student-loans\/\" target=\"_blank\">Social Security retirement<\/a>\u00a0and disability benefits. <\/p>\n<p>More than 42 million Americans hold student loans, and the outstanding debt exceeds\u00a0<a href=\"https:\/\/www.congress.gov\/crs-product\/IF10158#:~:text=Nearly%2043%20million%20individuals%E2%80%94one,portfolio%20now%20exceeds%20%241.6%20trillion.\" target=\"_blank\">$1.6 trillion<\/a>, according to the Congressional Research Service.\u00a0<\/p>\n<p>Here\u2019s what defaulted student loan borrowers should do during the pause on collections, experts say.<\/p>\n<\/div>\n<h2 id=\"file-your-taxes-immediately\" class=\"ArticleBody-subtitle\"><a id=\"headline0\"\/>File your taxes \u2018immediately\u2019 <\/h2>\n<div class=\"group\">\n<p>Just last week, consumer advocates were <a href=\"https:\/\/www.cnbc.com\/2026\/01\/14\/student-loans-default-tax-refunds-garnishment.html\">warning that student loan borrowers could lose their tax refund<\/a> if they\u2019re behind on their payments. Borrowers may now be in the clear. <\/p>\n<p>To protect any possible tax refund, defaulted student loan borrowers ought to \u201cfile their federal income tax returns immediately,\u201d said higher education expert Mark Kantrowitz. <\/p>\n<p>\u201cThe IRS starts accepting federal income tax returns on <a href=\"https:\/\/www.cnbc.com\/2026\/01\/08\/irs-accepting-tax-returns.html?msockid=2eef7e9809066c2415d868c3081f6df4\">January 26<\/a>,\u201d Kantrowitz said. \u201cIf the return is filed electronically, they typically issue refunds within 21 days.\u201d <\/p>\n<\/div>\n<h2 id=\"get-current-on-your-student-loans-asap\" class=\"ArticleBody-subtitle\"><a id=\"headline1\"\/>Get current on your student loans ASAP<\/h2>\n<div class=\"group\">\n<p>Getting current on your student loans as soon as possible will also stop the government from seizing a part of your wages or Social Security benefits when collections resume. <\/p>\n<p>The Education Department can offset up to 15% of a student loan holder\u2019s after-tax income to put toward their debt. Social Security recipients can also typically see up to 15% of their monthly benefit reduced to pay back their defaulted student debt. <\/p>\n<p><a href=\"https:\/\/studentaid.gov\/loan-consolidation\/\" target=\"_blank\">Applying for a loan consolidation<\/a>\u00a0is usually the fastest way to get out of default, said Kyra Taylor, a staff attorney at the National Consumer Law Center. The process can be completed in as little as four weeks, Taylor said. But some defaulted borrowers may be required to make several on-time payments before they can consolidate, and not all borrowers will qualify, including some who\u2019ve already consolidated their loans. <\/p>\n<p>Other things to consider: Consolidating your loans, which involves repackaging your federal student debts into a new federal student loan, can also lead you to lose progress on your forgiveness timeline under some repayment plans, Taylor said.\u00a0<a href=\"https:\/\/www.cnbc.com\/2025\/08\/28\/student-loan-repayment-plan-changes.html\">Borrowers may also lose out on current repayment options<\/a>\u00a0if the consolidation wraps up after June, due to Trump\u2019s \u201cbig beautiful bill.\u201d<\/p>\n<\/div>\n<div class=\"group\">\n<p>Another way to get out of default is through\u00a0<a href=\"https:\/\/studentaid.gov\/help-center\/answers\/article\/loan-rehabilitation\" target=\"_blank\">a loan rehabilitation<\/a>. <\/p>\n<p>That process involves making \u201cnine voluntary, reasonable and affordable monthly payments,\u201d according to the U.S. Department of Education. Those nine payments can be made over \u201ca period of 10 consecutive months,\u201d it notes on the StudentAid.gov site.<\/p>\n<p>Your loan servicer may agree to end collection activity against you sooner if you start rehabilitation not long after receiving a notice of default or if you\u2019ve already made five rehabilitation payments.<\/p>\n<\/div>\n<h2 id=\"find-an-affordable-repayment-plan\" class=\"ArticleBody-subtitle\"><a id=\"headline2\"\/>Find an affordable repayment plan <\/h2>\n<div class=\"group\">\n<p>To avoid falling back into default, find a student loan repayment plan you can afford, consumer advocates say. <\/p>\n<p>You can submit a request for an income-driven repayment plan at\u00a0<a href=\"https:\/\/urldefense.com\/v3\/__https:\/studentaid.gov\/idr__;!!HqJSLGM!sjeFTPQOGQcyMnBtqyEddGs_lrnZjjjlC_OquUIRQgnyEaYvtRfoBf4RXCSIy_PecBhucFkveifYC_EB6OXD$\" target=\"_blank\">StudentAid.gov<\/a>. IDR plans cap your monthly payments at a share of your discretionary income and lead to debt forgiveness after a certain period, typically 20 years or 25 years.<\/p>\n<p>Most borrowers will be best off enrolling in the Income-Based Repayment plan, or IBR, Kantrowitz said. Trump\u2019s tax and spending package\u00a0<a href=\"https:\/\/www.nasfaa.org\/uploads\/documents\/Federal_Student_Aid_Change_OB3.pdf\" target=\"_blank\">phases out the<\/a>\u00a0Income-Contingent Repayment plan, or ICR, and the Pay as You Earn plan, or\u00a0<a href=\"https:\/\/www.nasfaa.org\/uploads\/documents\/Federal_Student_Aid_Change_OB3.pdf\" target=\"_blank\">PAYE<\/a>, as of July 1, 2028.<\/p>\n<p>Starting July 1, 2026,\u00a0<a href=\"https:\/\/www.cnbc.com\/2025\/07\/19\/student-loan-bills-save-relief-expires.html\">student loan borrowers<\/a>\u00a0will have access to another IDR option, the \u201c<a href=\"https:\/\/www.nasfaa.org\/uploads\/documents\/Federal_Student_Aid_Change_OB3_July2025.pdf\" target=\"_blank\">Repayment Assistance Plan<\/a>,\u201d or RAP.\u00a0That plan leads to debt forgiveness after 30 years, compared with the typical timeline on other plans. But it will offer the lowest monthly bill for some borrowers due to its longer term.<\/p>\n<p>There are\u00a0<a href=\"https:\/\/studentloanplans.app\/\" target=\"_blank\">several tools<\/a>\u00a0available online\u00a0<a href=\"https:\/\/studentaid.gov\/loan-simulator\/\" target=\"_blank\">to help you determine<\/a>\u00a0how much your monthly bill would be under different plans. Borrowers should be able to move between repayment plans at any time.<\/p>\n<p>Borrowers in especially difficult financial circumstances can look into options to pause their payments altogether, such as through the <a href=\"https:\/\/studentaid.gov\/sites\/default\/files\/EconomicHardshipDeferment.pdf\" target=\"_blank\">economic hardship deferment<\/a> or <a href=\"https:\/\/studentaid.gov\/sites\/default\/files\/UnemploymentDeferment.pdf\" target=\"_blank\">unemployment deferment<\/a>. <\/p>\n<\/div>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.cnbc.com\/2026\/01\/20\/trump-delay-student-loan-collections.html\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Halfpoint Images | Moment | Getty Images Student loan borrowers in default got a reprieve last week: The&hellip;\n","protected":false},"author":3,"featured_media":40311,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-40310","post","type-post","status-publish","format-standard","has-post-thumbnail","category-investing","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/40310","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=40310"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/40310\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/40311"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=40310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=40310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=40310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}