If You're in Student Loan Default, the Six-Month Pause on Wage Garnishment Is About to Run Out.

If you have a federal student loan in default, the quiet six months you just had with no garnishment notice and no Treasury Offset on your refund is running out. The Education Department paused both in January. The pause is tied to the new income-driven repayment plan that launches July 1, 2026. After that, the 30-day garnishment clock can start ticking again on any of the roughly 5 million borrowers who are still in default.

Default is the technical word. The plain-English version: you missed payments for at least 270 days. Once that happens, the Education Department can order your employer to withhold up to 15% of your disposable pay without going to court, and Treasury can seize your federal tax refund through the Treasury Offset Program. Both were turned off in January under Under Secretary of Education Nicholas Kent, who said involuntary collection would “function more efficiently and fairly” after the system overhaul.

Translation: they paused so the new repayment plan could land first. Now it is landing.

The department has not put a hard restart date on its site. What it has said is that the pause is tied to the Working Families Tax Cuts Act plan rolling out July 1. The reading from CBS News and the legal trackers covering the rule is that the pause was meant to bridge to that date, not to extend past it. If your wages or refund get touched, the government has to send you a 30-day notice first. That is your window.

5 million: the number of borrowers in default whose wage garnishment and tax refund seizures were paused in January and are now expected to come back online (Department of Education, CBS News).

Here is the move. You have three real options, and the right one depends on whether your credit matters more than your timing.

Rehabilitation is the cleanest. You make 9 voluntary monthly payments over 10 months at an amount tied to your income (the standard formula is 15% of your discretionary income, divided by 12). When you finish, the default mark comes off your credit report and your federal aid eligibility comes back. Garnishment stops after the fifth qualifying payment. The catch: you can only rehabilitate a loan once, so do not waste the shot on a payment you can’t sustain.

Consolidation is the fastest. You combine your defaulted loans into a new Direct Consolidation Loan with an income-driven plan, and you are out of default in roughly 30 to 60 days. That stops garnishment quickly. The catch: the default itself stays on your credit history for up to 10 years, and any late payments before default stay too. Use this if you have a wage garnishment notice in hand and you do not have 9 months of room.

Paying the balance in full is the third option. Most defaulted borrowers do not have the cash, but if you do (or your family does), it is the only option that closes the file cleanly.

Do this now. Log in to StudentAid.gov, confirm your loan status, and pick one of the three before a 30-day notice shows up. If you already got the notice, call your servicer (not the collection contractor) and ask which option lets you stop garnishment fastest. Rehabilitation paperwork can take a few weeks, so leaving it until the notice arrives is leaving it too late.

If you are not in default and you are just trying to pick a new plan, that is a different problem. We covered current SAVE borrowers in Your SAVE plan is over, here is the move. This one is for the borrowers the system stopped calling six months ago.

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