What’s Really Changing with Student Loans in 2026 (And Why You Can’t Ignore This)

We know, this is a lot. But this is also one of those “slow down and read it” moments.

After years of pauses, extensions, and temporary relief, multiple student loan changes are hitting at once. What happens next could directly affect your paycheck, your tax refund, and your repayment strategy in 2026 and beyond.

Here’s what matters most and why now is the time to pay attention.

Wage Garnishment Is Returning for Borrowers in Default

For the first time since before the pandemic, the Department of Education has confirmed that wage garnishment will resume in 2026 for defaulted federal student loans. That means borrowers in default could lose up to 15% of their income through automatic paycheck withholding.

During the pandemic and the post-pause transition, many borrowers remained in default without immediate consequences. That window has officially closed.

Since repayment resumed in September 2023 and the one-year on-ramp ended, thousands of borrowers have been falling back into default each month, a trend expected to continue into early 2026.

Why this matters now:

Federal student loan wage garnishment does not require a court judgment. Once collections restart, paychecks can be impacted quickly, often before borrowers fully understand their options. For households already stretched by inflation and rising costs, this could be one of the first major financial shocks of 2026.

Tax Refund Offsets Are Back, Just in Time for Tax Season

Alongside wage garnishment, the federal government has restarted the Treasury Offset Program (TOP) for defaulted student loans.

Under TOP, borrowers in default may have federal tax refunds and certain federal benefit payments intercepted and applied to their student loan balances.

This is especially important for borrowers who:

• Rely on refunds to catch up on bills

• Plan to use refunds for housing, childcare, or debt repayment

• Assume refunds are “safe” because they haven’t heard from a servicer recently

Why this matters now:

Refund offsets can occur even without recent collection notices. Many borrowers don’t realize they’re still considered in default or assume pandemic-era protections still apply. Unfortunately, those protections have ended.

SAVE Is Ending! Millions Will Need a New Repayment Strategy

The SAVE repayment plan, which significantly lowered payments for millions of borrowers, is widely expected to sunset as litigation and policy restructuring continue.

While timelines are still evolving, the direction is clear:

• SAVE is not a long-term solution

• Borrowers enrolled in SAVE will need to transition to another plan

• Waiting without a strategy could mean higher payments or lost progress

Many borrowers in SAVE have been in administrative forbearance while court cases play out. While payments may be paused, interest has resumed, and uncertainty can delay important planning decisions.

Why this matters now:

Borrowers who wait until SAVE officially ends may be forced into fast, uninformed choices. Planning early creates more control and often better outcomes.

Student Loan Processing Delays Continue. Backlogs Are Still Growing

Even as major policy changes unfold, borrowers are facing another challenge: persistent processing delays.

A January 2026 court filing shows that while some progress has been made, large backlogs remain:

• Over 734,000 IDR applications were still pending as of December 31, 2025

• PSLF Buyback delays continue to grow, with more than 83,000 applications waiting and far fewer decisions issued each month than new requests received

These delays affect borrowers trying to:

• Switch repayment plans

• Update income or family size

• Secure forgiveness credit or PSLF Buyback progress

Why this matters now:

Even when a borrower qualifies for a better option, the administrative decision may take months or longer. At current processing rates, some backlogs could stretch for years. These delays directly affect timing, eligibility, and long-term financial outcomes, making proactive planning more important than ever.

2026 Brings a Major Repayment System Overhaul

Beyond SAVE, federal student loan repayment is undergoing its largest redesign in decades.

Expected changes in 2026 include:

• Fewer total repayment plans

• A new income-driven option, the Repayment Assistance Plan (RAP) (expected July 2026)

• Greater reliance on standardized repayment pathways

• IBR emerging as the primary legacy income-driven plan for many borrowers

While the goal is simplification, transitions often bring confusion and missed opportunities for borrowers who aren’t paying attention.

Why this matters now:

Borrowers who understand their loan status and repayment eligibility early will be best positioned to choose the most affordable and strategic option as these changes roll out.

In this month's Insights blog post, we translate these policy changes into a clear, step-by-step framework, so you can understand what to prioritize now, what can wait, and how to avoid the most expensive mistakes.

👉 Continue Reading: Your 30-Day Student Loan Game Plan for 2026

Not sure where you stand?

Many borrowers don’t realize they’re in default, at risk of offset, or relying on a repayment plan that may not exist later this year.

Log into Student Debt Solutions to review your loan status, model repayment options, and see recommended next steps based on today’s rules.