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Over five million borrowers are currently in default on their Federal student loans. The U.S. Department of Education (ED) previously announced they would begin garnishing the wages of those in default in early 2026. Up to 15% of a borrower’s net income could be garnished. However, in a press release published late last week, ED indicated they will temporarily pause involuntary collections, including wage garnishment.
- ED says the delay will enable them to implement major student loan repayment reforms and give defaulted borrowers additional time to evaluate their options.
- There is not a new date given for future wage garnishment, but ED indicated the new loan repayment reforms begin July 1, 2026.
- For detailed information on wage garnishment, other ways ED can collect debt, and how to make a valid objection to the debt collection, click here.
Are Your Loans Nearing Default?
Loans enter a delinquency status the first day after a missed payment. Below are three tips to help prevent entering loan default:
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Check your loan status. Borrowers may be at risk for future wage garnishment if the loans have been moved to ED's collection agency, the Default Resolution Group. Log into your online account at your loan servicer’s website to check the loan balance is listed and active. If you are unsure who your loan servicer is, you can look it up by logging into studentaid.gov, navigating to your “Dashboard” and then the “My Loan Servicers” section.
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Explore different repayment options. You may be eligible for a more affordable payment plan based on your income. You can apply online for an income-driven repayment plan.
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Apply for a deferment or forbearance. Both options would put a temporary pause on repayment for a period of time. You can apply online through your loan servicer.
Are Your Loans in Default?
Loans enter default after 270 days have passed without making a loan payment. There are three ways to get out of default:
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Pay the loan in full. Contact the Default Resolution Group or visit myeddebt.ed.gov to confirm the amount owed.
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Rehabilitate the loan. Loan rehabilitation involves making nine consecutive, on-time payments based on income. This option takes longer to get out of default but can save on overall collection costs.
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Consolidate the loans. Consolidation combines multiple loans into one loan with new loan terms. Once the consolidation is complete, the borrower is eligible for lower monthly payments and the loan status is restored to good standing. Apply for loan consolidation here.
For more information on getting out of default and comparing your options, click here.
Ongoing Backlogs for Student Loan Forgiveness and Repayment Plan Processing
As part of a status update required from a court filing related to ongoing legal challenges over allegedly delayed processing of applications associated with Income-Driven Repayment (IDR) plans and Public Service Loan Forgiveness (PSLF), ED announced new limitations on processing those applications.
- Based on the most recent status report, more than 277,000 IDR applications were processed with over 242,000 applications approved. An increase from last month’s 245,000 processed applications. There is still a backlog of 734,221 IDR applications.
- 1,930 PSLF Buyback applications were processed in December, with 1,690 being approved. There is still a backlog of 83,370 applications. The buyback program allows borrowers to pursue PSLF by retroactively paying for any months that did not qualify because of forbearance or deferment.
- 3,400 borrowers received loan forgiveness under the Income-Based Repayment (IBR) plan. This is a large jump from only 170 borrowers last month. However, no forgiveness has been granted for borrowers under the Income-Contingent Repayment (ICR) plan and Pay As You Earn (PAYE) plan.
- ED is still working to update their systems to allow for ICR and PAYE student loan forgiveness processing. They anticipate this to be resolved by February 2026.
- ED indicated that the ongoing injunction in the SAVE plan litigation blocked the department from counting certain periods of deferment and forbearance toward IDR student loan forgiveness in April 2025 which has also delayed processing.
- ED suggested that once the litigation is complete and the SAVE plan is officially eliminated, processing forgiveness under the IBR, ICR, and PAYE plans can continue.
Interested in learning more about borrowing student loans and student loan repayment? Sign up for a free webinar!
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