DeVos orders FSA to stop wage garnishment and collection actions for student loan borrowers

Federal government to reimburse more than $ 1.8 billion to students and families

U.S. Education Secretary Betsy DeVos on Wednesday announced that due to the national COVID-19 emergency, the department will end collection actions and wage garnishments to provide additional assistance to borrowers. This flexibility will last for a period of at least 60 days from March 13, 2020.

“These are tough times for many Americans, and we don’t want to do anything that will make it harder for them to make ends meet or create additional stress,” Secretary DeVos said. “Americans who rely on their tax refund or Social Security check to make ends meet during this national emergency should receive these funds, and our actions today will ensure that they do.”

Under the secretary’s leadership, the department has ended all requests to the US Treasury to withhold money from federal default borrower income tax refunds, Social Security payments, and other federal payments. Such holdbacks, known as “Consolidated Revenue Fund”, are permitted by federal law and applied to the repayment of delinquent federal student loans. At the same time, the secretary ordered the ministry to repay about $ 1.8 billion in compensation to more than 830,000 borrowers. The Ministry expects that the number of borrowers who will benefit from this relief will increase as service officers work on additional offsets in the queue at the time of this announcement.

The refunds represent compensations that were set to be withheld on March 13, 2020, when President Donald J. Trump declared a national emergency and announced emergency executive measures related to COVID-19.

In addition, private collection agencies have been ordered to stop all proactive collection activities, including making phone calls to borrowers and issuing collection letters and billing statements.

The ministry must rely on employers to change borrower paychecks. It will therefore monitor employers’ compliance with the request to end wage garnishment. Borrowers whose wages continue to be garnished after March 13 should contact their employer’s human resources department.

Borrowers with delinquent student loans, a current relationship with a private collection agency, and an interest in continuing a previous payment arrangement, consolidating their loans, or entering into a loan rehabilitation agreement with their private collection agency, should contact the Department’s Defect Resolution Group at 1-800-621-3115 (TTY for the Deaf or Hard of Hearing 1-877-825-9923). Private collection agencies are authorized to provide assistance at the request of the borrower.

This New Student Loan Relief For Borrowers Is Just Coming Days later President Donald J. Trump has announced that borrowers with federally held student loans will automatically have their interest rates set at 0% for a period of at least 60 days. In addition, these non-defaulting borrowers will have the option to suspend their payments for at least two months to allow them greater flexibility during the national emergency. This will allow borrowers to temporarily stop their payments without worrying about accrued interest.