Student-loan borrowers are facing debt-relief whiplash under Trump

• Trump's administration announced a pause on wage garnishment and tax refund seizure for defaulted student-loan borrowers.
• At the same time, thousands of borrowers are waiting for debt relief through income-based repayment plans to be processed.
• The uncertainty is making it difficult for borrowers to financially prepare.

If there's one thing student-loan borrowers are familiar with, it's uncertainty — and there's a lot of that right now.

Around the time it was set to take effect in early January, President Donald Trump's Department of Education announced that it was pausing wage garnishment and tax refund seizures for defaulted student-loan borrowers. This gives borrowers behind on payments more time to find a way back to good standing, but it's unclear how much time they'll have.

As to when that pause will lift, not even servicers appear to know. An employee at a major student-loan servicer told Business Insider that they received communications about the pause just days before it was announced to the public, and they do not know when garnishment and treasury offsets will resume.

While the pause is good news for borrowers and provides them with relief as tax season commences, student-loan forgiveness backlogs continue to weigh on the thousands waiting for their relief to be processed. A recent court filing from the Department of Education said that 734,221 income-driven repayment applications were pending as of December 31, 2025, and that 3,400 discharges were approved in December.

The department wrote in its filing that litigation over the SAVE income-driven repayment plan is preventing it from processing some borrowers' debt relief applications. SAVE, created by former President Joe Biden to give borrowers cheaper monthly payments and a short timeline to debt relief, has been blocked since July 2024, and the department's filing said that it is focusing on processing income-based repayment discharges for borrowers who became eligible for relief before April 2025, the month that the block on SAVE was expanded in court.

During this time, the department said that it is "evaluating the most effective way to resume discharges for the borrowers who would have become eligible under the SAVE Plan Final Rule criteria after the date of the injunction. Currently, the only cancellations taking place are for IBR borrowers who became eligible before April 2025."

The pause on consequences for defaulted borrowers provides some relief, while the pause on forgiveness processing prolongs uncertainty — and, with more repayment changes on the horizon, student-loan borrowers have described feeling stuck in limbo, unable to financially plan. Some policy experts and lawmakers have also said that while the pause for defaulted borrowers is needed relief, the uncertainty could put borrowers at risk.

The department said in a press release last week that the delay in collections is intended to give borrowers "additional time to evaluate these new repayment options once they consolidate their loans or complete a repayment or rehabilitation agreement."

Student-loan repayment changes loom

With all of the back-and-forth policy changes, it's difficult to keep track of what is, and isn't, happening for student-loan borrowers.

The main change that defaulted borrowers need to know is that their wages and other federal benefits should not be seized until the Department of Education announces that the pause is lifted.

"The Trump Administration is committed to helping student and parent borrowers resume regular, on-time repayment, with more clear and affordable options, which will support a stronger financial future for borrowers and enhance the long-term health of the federal student loan portfolio," Undersecretary of Education Nicholas Kent said in a statement last week.

Meanwhile, borrowers should prepare for looming repayment changes, which were signed into law in Trump's "big beautiful" spending legislation.

Beginning in July, the department will begin rolling out new income-driven repayment plans and borrowing caps for graduate and professional degrees. Additionally, over 7 million borrowers enrolled in SAVE could be kicked off the plan sooner than anticipated; the department announced a proposed settlement that, if approved, would give SAVE borrowers a limited time to enroll in a new plan and face higher payments.

"I'm bracing for an astronomical bill," Brenda McCoy, a 60-year-old borrower on SAVE, previously told Business Insider.