Federal Student Loan Collections Restarted in 2025, Then Paused Again

Citation

U.S. Dep't of Educ. press releases (Apr. 21, 2025; Jan. 16, 2026); CARES Act, Pub. L. No. 116-136, § 3513(e) (2020)

Court or agency

U.S. Department of Education

Date

January 16, 2026

Law

Other

Summary

The CARES Act suspended involuntary collection of defaulted federal student loans in March 2020, and the pause continued for five years. The Education Department announced that collections would restart on May 5, 2025. On January 16, 2026, it delayed wage garnishment and Treasury offsets again, citing new repayment and rehabilitation options.

Background

The federal government does not need to sue to collect a defaulted federal student loan. It can use Administrative Wage Garnishment, and through the Treasury Offset Program it can intercept tax refunds and certain federal benefits.

Section 3513(e) of the CARES Act, enacted in March 2020, required the Education Department to suspend all involuntary collection on covered loans during the payment pause. The pause on collecting defaulted loans continued for years after that.

What changed

• April 21, 2025. The Department announced that its Office of Federal Student Aid would resume collections on defaulted federal student loans on Monday, May 5, 2025. It said it had not collected on defaulted loans since March 2020, and that more than 5 million borrowers had not made a payment in over 360 days and were in default.
• January 16, 2026. The Department announced a temporary delay of involuntary collections, including Administrative Wage Garnishment and the Treasury Offset Program. It said the delay would let it carry out repayment changes under the Working Families Tax Cuts Act. Those include a new income-driven plan available from July 1, 2026, and a second opportunity to rehabilitate a defaulted loan. The Department said it still reports defaults to credit reporting agencies.

As of this update, we did not find a public announcement of a date for restarting wage garnishment or Treasury offsets. Borrowers should check StudentAid.gov for current status.

Our take

Student loans are the main exception to Texas’s strong protection of wages. The Texas Constitution generally bars wage garnishment for consumer debts, but federal law lets the government administratively garnish wages for defaulted federal student loans.

The current pause is temporary by its own terms. It is a window to resolve a default through rehabilitation or consolidation, not a sign that collections are over.

What it means if you’re sued in Texas

Federal Direct Loans are usually collected administratively, not through Texas courts. Private student loans are different. They are collected like other consumer debts, often through lawsuits, and are subject to Texas limitations periods and the usual proof requirements.

If you are being sued over a student loan, find out whether it is federal or private, who owns it, and whether the plaintiff can prove the chain of ownership. A free case review is available.

Takeaway

If you have a defaulted federal student loan, use the pause to look at rehabilitation, consolidation or an income-driven plan before involuntary collections restart.

Sources

Primary authority

• Education Department to begin federal student loan collections (ED press release, Apr. 21, 2025)
• Education Department delays involuntary collections (ED press release, Jan. 16, 2026)
• CARES Act, Pub. L. 116-136 (GovInfo)

Secondary sources

• Education Department to delay collections on defaulted student loans (CNBC)

This summary and analysis are general information, not legal advice. Later decisions, amendments or agency actions may change the law; check the current status before relying on it.