Trump Admin Pauses Tax Refund Seizures, Wage Garnishments for Defaulted Student Loans

The U.S. Department of Education will suspend, for now, tax refund seizures and wage garnishments for people in default on their federal student loans. The suspensions took effect on Jan. 16 and do not yet have a specific end date. The pause on wage garnishments will allow time to implement changes to repayment plans under President Donald Trump’s sweeping tax and spending package, the One Big Beautiful Bill Act, according to a statement from the Education Department. One of the most significant changes is consolidating all income-driven repayment options into a single plan, dubbed the Repayment Assistance Plan (RAP). It will waive unpaid interest for borrowers who make on-time payments that do not fully cover accrued interest, and in certain cases will include small matching payments from the department to ensure that outstanding principal is reduced each month. RAP can also end in forgiveness if a borrower is still carrying a balance after 30 years of repayment....