Advocates say current rules are outdated and unrealistic
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The U.S. Department of Education will delay plans to seize tax refunds and garnish wages from struggling student loan borrowers
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Consumer advocates say current collection rules are outdated and risk pushing families and seniors into poverty
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The pause renews calls for reforms to reflect todays cost of living
The U.S. Department of Education has announcedthat it will delay plans to resume aggressive debt collection against student loan borrowers who have fallen behind on their payments, including seizing tax refunds and garnishing wages.
The move offers temporary relief to millions of borrowers still struggling with rising living costs after years of pandemic-era payment pauses and policy changes.
Todays announcement throws a lifeline to working and middle class families who are buckling under the weight of outdated student loan policies that dont reflect todays high cost of living and affordability crisis, said Abby Shafroth, managing director of advocacy at the National Consumer Law Center.
Advocates warn collection rules are decades out of date
Consumer advocates say the departments existing collection policies were set decades ago and have not kept pace with inflation or housing, food, and health care costs.
Under current rules, the Department of Education protects only the first $217.50 per week in wages from garnishment a threshold set in 2009. According to advocates, the buying power of that amount has fallen by more than 30% since then and now sits well below the federal poverty line.
Similarly, the department protects just $750 per month in Social Security benefits from seizure, a figure established in 1996. Today, that amount is less than 60% of the poverty line, putting older borrowers at particular risk.
Without changes, advocates warn that restarting collections largely paused since 2020 could push working families and retirees into poverty.
Calls grow for broader reforms before collections resume
Shafroth said the delay should be followed by structural changes to how the federal government collects student loan debt.
The Department of Educations current collection policies are outdated and can trap people already struggling to keep up with rising costs deeper in debt and even push them into poverty, she said. Thats the opposite of what our financial aid policies are supposed to do.
Consumer advocates are urging the administration to increase the amount of income protected for basic living expenses, shield anti-poverty benefits such as Social Security and the Earned Income Tax Credit from seizure, and cap collections at the amount borrowers are actually behind on payments.
They are also calling for simpler pathways for borrowers who fall behind to enroll in repayment plans or other options that help them manage their loans successfully.
For now, the departments decision delays the resumption of some of the governments most punitive collection tools but advocates say long-term relief will depend on whether those tools are reformed before they are turned back on.
Posted: 2026-01-20 00:10:30
