If the pause hadn’t been put in place, this wouldn’t have played out gradually. It would have hit all at once. At the time of the decision, about 5–6 million borrowers were already in default, and another 3–4 million were close enough that they would have been pulled in quickly once enforcement resumed. That puts roughly 9–10 million people at real risk of wage garnishment or seizure of tax refunds and federal benefits. Federal student loan collections allow the government to take up to 15% of wages without a court order. Applied at that scale, it would have removed cash flow from millions of working households almost immediately.

Why That Would Have Broken The Credit Channel

Once wage garnishment starts, the borrower isn’t just behind they become effectively unlendable. Credit scores crater, refinancing shuts down, auto loans get denied, housing access tightens, and even basic consumer credit becomes scarce. Do that to 8–10 million working age borrowers, and you don’t just hurt those households, you shrink the pool of creditworthy borrowers across the entire economy. Banks respond by tightening standards, not just for student loan borrowers but for everyone. Auto sales slow, consumer credit rolls over, small businesses lose both customers and access to financing, and housing turnover drops. That’s how a targeted enforcement policy turns into a broader economic slowdown.

Why This Decision Happened Now

This wasn’t about forgiveness or ideology. It was about timing and damage control. When the pause was announced, the backdrop already included slowing job growth, rising delinquencies elsewhere in consumer credit, banks quietly tightening standards, and a late cycle feel across the economy. Restarting mass garnishment in that environment would have accelerated a credit contraction that was already forming. My read is that Trump didn’t stop collections to help borrowers, he stopped them to avoid detonating the consumer credit base at a fragile moment. If the economy were strong, enforcement would have resumed. It didn’t, because policymakers knew the system couldn’t absorb that shock without breaking something bigger.