Summary
The U.S. Education Department announced it will delay starting collection efforts, like wage garnishment, on defaulted federal student loans. This pause will give time to introduce new ways for people to pay back loans, as required by the Working Families Tax Cuts Act. Borrowers in default will get extra time to make their loans current before collections resume.
Key Facts
- The delay affects defaulted federal student loans.
- Collections like wage garnishment and Treasury offsets are postponed.
- The pause is to prepare for new repayment changes under the Working Families Tax Cuts Act.
- A new income-driven repayment plan will be introduced, waiving unpaid interest in some cases.
- Borrowers will have more time to rehabilitate or consolidate their loans.
- A loan defaults after 270 days without payment, which can lead to action like wage garnishment.
- The aim is to offer clearer and more consistent repayment paths for borrowers.
