Student loans: Trump administration delays plan to withhold pay for borrowers in default

Student loan delinquency rate spikes post pandemic

Nearly one in three student loan borrowers are at risk of defaulting on payments as early as July. This comes as delinquency and default rates soar in the wake of pandemic-era repayment relief ending. This accounts for about 5.8 million federal student loan borrowers, who were 90 days or more past due on their payments as of April 2025. This new information comes from analysis from TransUnion. LiveNOW?s Andrew Craft is getting the latest from Fox News multimedia reporter, Caroline Elliott.

The Trump administration on Friday announced it would delay its plan to withhold pay from student loan borrowers who are in default on their payments.

The Education Department said involuntary collections on federal student loans will remain on hold as the agency finalizes new repayment plans.

The department did not set a new date for involuntary collections. It said the delay will give borrowers time to evaluate new repayment plans that are scheduled to be available starting July 1.

What they're saying:

"The Department determined that involuntary collection efforts such as Administrative Wage Garnishment and the Treasury Offset Program will function more efficiently and fairly after the Trump Administration implements significant improvements to our broken student loan system," Nicholas Kent, the department’s higher education chief, said in a statement. 

 Northeastern University students celebrate the conclusion of their University's 121st undergraduate commencement at Fenway Park by throwing their caps in the air. (Photo by Matthew J. Lee/The Boston Globe via Getty Images)

Student loan payments in default 

The backstory:

The Trump administration announced in May of 2025 that it would resume collections on defaulted federal student loans — including wage garnishment and the seizure of Social Security benefits — ending a pause that has been in place since 2020.

The government stopped referring federal student loans to collections in March 2020 at the onset of the COVID-19 pandemic.

By the numbers:

More than 5 million Americans were in default on their federal student loans as of September, according to department data. Millions more have fallen behind on loan payments and are at risk of going into default this year.