54,000 people saw their paychecks seized to pay off student loans, despite a hiatus

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The education ministry was supposed to stop seizing the salaries of borrowers to pay their student loan debt. A new trial says they didn’t.

Here’s what you need to know.

Student loans

Federal student loan debt collection was scheduled to stop as of March 13, 2020. Why? The CARES Act – the $ 2.2 trillion financial stimulus package in the wake of the coronavirus pandemic – instituted several protections for federal student loan borrowers from March 13, 2020 to September 30, 2020. Among other benefits , this includes suspension of federal student loan payments, interest rate on federal student loans set at 0%, and no debt collection for federal student loans on delinquent student loans.

A federal class action lawsuit filed in April in Washington, DC alleges that despite the prohibition set by the CARES Act, US Secretary of Education Betsy DeVos is illegally seize paychecks federal student loan borrowers during the coronavirus pandemic. The main complainant is Elizabeth Barber, who according to her complaint has had her working hours reduced, has no money in her bank account, unpaid local taxes, a lien on her house and is in arrears on loans students as well as on water and electricity bills. Despite these financial challenges, Barber says the Education Department seized his salary (an apparent violation of the CARES Act) to pay off his delinquent federal student loans. The Education Department told the court as of March 13, about 390,000 student loan borrowers were facing payday garnishment for overdue student loan payments. About 14%, or 54,000, are always (almost two months later) having their wages entered on their paychecks.


Why are wages always garnished?

Payday garnishment – which automatically withdraws money from your paycheck to pay off overdue debts such as student loans – is done by your employer, not the Department of Education. The Education Department says it has advised employers to comply with the CARES law and to stop garnishing their employees’ wages as of March 13. Apparently not all employers – for one reason or another – are in compliance. According to The Washington Post, the education service noted it has proactively sent letters to 83,500 borrowers (more than the approximately 54,000 borrowers who would have been affected by the wage garnishment) who are in default on their student loans. The Education Department also says it is contacting 4,400 borrowers who have not updated their correct address information.


Can you get a refund if your wages have been garnished?

Yes, it is possible to receive a full refund if your wages have been illegally garnished through garnishment, tax refund or Social Security benefits, for example. It depends on the date on which your salary was entered:

  • Before March 13, 2020: no refund
  • After March 13, 2020: refund

Indeed, March 13 is the date the CARES Act came into effect and the day the garnishment of wages to pay delinquent student loans was halted. If your wages or other benefits have been illegally seized, contact the education department’s fault resolution group for a refund at 1-800-621-3115 (TTY for the deaf or hard of hearing 1-877-825-9923). When exactly will you be reimbursed? Unfortunately, there is no specific schedule. Senator Cory Booker (D-NJ) and Representative Ayanna Pressley (D-MA) and 40 members of Congress sent a letter to DeVos demanding that the Department of Education stop any pending illegal wage garnishments to collect federal student loan debt and to provide a clear timeline for when borrowers who have been affected can receive full repayment.

Can the government garnish your salary to pay off student loans?

Except during the period protected by the CARES Act, the answer is yes. The federal government can legally withhold up to 15% of your paycheck to collect overdue federal student loan debt. The latest statistics on student loan debt show that in 2018, for example, the US Department of Education legally seized $ 840 million through wage garnishment.

Useful resources: student loans

Here’s everything that happened to your student loans in 2 weeks

How to pay off your student loans during the Coronavirus

How to get financial relief for your student loans during the coronavirus

How to get relief for your private student loans

Should You Pay Off Student Loans During COVID-19?

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These companies are hiring despite the Coronavirus

What you need to know about paid sick leave during coronavirus

Are you entitled to paid sick leave?

How to contact your student loan manager

5 Ways To Lower Your Student Loan Payments During Coronavirus

Student Loan Refinance Rates Are Insanely Cheap

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