Federal government halts involuntary student loan collections

DECATUR, Ill. (WAND) - The federal government is pausing involuntary collections on student loans after previously sending out notices to some in default.

"People that were going to have their refunds taken or have 15% of their after-tax wages garnished are now on hold, and nobody else is going to get those letters," said Director of Lender and Government Relations Jack Wallace.

The delay gives people who are delinquent or in default more time to find a rehabilitation plan or consolidate their loans.

"They lay out a plan and then you have to make nine on-time payments of whatever that new payment amount is," Wallace said. "When you do that, then you're back in good graces and you won't be in default."

Wallace said the most updated numbers show 5.5 million Americans are in default. Of those, 170,000 are Illinoisans. Wallace expects those numbers to rise since they're pre-COVID statistics.

While repayment options can be confusing, Wallace says a new option is coming in July.

"The new one that was in the Big Beautiful Bill is effective July 1, 2026, so we can go shop around now and see what's available," he said.

If you are in default on your student loans, go to MyEdDebt.ed.gov for help.

If you are looking for more information on repayment plans, head to mystudentaid.gov.

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