Following the widespread outbreak of the Coronavirus (Covid-19), President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. The $2.2 trillion financial stimulus package was intended to provide fast and direct economic protection for individuals, families, and small businesses, and to help preserve jobs during the pandemic.
In addition to stimulus payments to families, grants and paycheck protection to businesses, and assistance to local and state governments, the CARES Act was also intended to provide several protections for federal student loan borrowers from March 13 through September 30, 2020. This was to include the suspension of federal student loan payments, interest rates on federal student loans to be set to 0%, and the halting of federal student loan debt collection on those student loans in default.
Despite this order for protection, borrowers are finding their paychecks are still being garnished to repay past-due student loans according to a class-action lawsuit filed in April against the Education Department and Education Secretary Betsy DeVos alleging mismanagement of the CARES Act. The court report states that over 390,000 people were subject to involuntary collection as of March 13, a much higher number than the 285,000 that was originally reported by the Department of Education.
Attorneys for the Department of Education state in their response to the claim that they are “continuing to endeavor to halt all wage garnishments,” but have not elaborated on when this will take place. They also suggest that the problem lies with the companies employing federal student loan borrowers and not the department itself. Employers, the department states, have been instructed via phone calls and emails to cease wage garnishment, however, some continue. Advocates for the borrowers claim that emails sent to employers remained unopened and they question why paper letters were not sent from the onset.
On Monday, May 11, 2020, the department sent out paper letters that included a list of employee names as to who should no longer have their wages garnished to over 37,000 employers who have continued the wage garnishment despite the CARES Act moratorium. They also state that they will make phone calls to employers to confirm that they have been properly notified of the stoppage and that they are required to cease wage garnishment on the government’s behalf.
According to Angela Morabito, spokeswoman for the Department of Education, the department has also mailed letters to 83,500 borrowers whose loans are in default to explain that their employers should immediately stop garnishing their wages and that the department will quickly, within 30-60 days, refund the money via mailed check, that was taken once President Trump declared a national emergency on March 13. Morabito encourages employees to take this letter to their employer as soon as it is received as further evidence that their wages should not be garnished during this time.
Borrowers must be an informed advocate for themselves and the law is on your side. If you are currently having your wages garnished for defaulted federal student loans, it is illegal and must be stopped. The Education Department recommends contacting your employers’ human resources department and remain persistent. If you have questions about the status of your wage garnishment refund, you can contact the Education Department’s Default Resolution Group at
1-800-621-3115.
If you continue to experience wage garnishment from your employer, you do have other options. At America’s Consumer Lawyer, we can review your case and determine the best course of action to stop federal student loan wage garnishment during this difficult time and help you get the refund you are entitled to.
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