WASHINGTON — U.S. Secretary of Education Betsy DeVos announced today that, due to the COVID-19 national emergency, the Department will halt 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 difficult 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,” said Secretary DeVos. “Americans counting on their tax refund or Social Security check to make ends meet during this national emergency should receive those funds, and our actions today will make sure they do.”
At the Secretary’s direction, the Department has stopped all requests to the U.S. Treasury to withhold money from defaulted borrowers’ federal income tax refunds, Social Security payments, and other federal payments. Such withholdings, known as “Treasury offsets,” are permitted by federal law and applied toward repayment of defaulted federal student loans. At the same time, the Secretary directed the Department to refund approximately $1.8 billion in offsets to more than 830,000 borrowers. The Department expects the number of borrowers who will benefit from this relief to increase as servicers work through additional offsets in the queue at the time of this announcement.
The refunds represent offsets that were in the process of being withheld on March 13, 2020, the date President Donald J. Trump declared a national emergency and announced emergency executive actions related to COVID-19.
Additionally, private collection agencies have been instructed to halt all proactive collection activities, including making phone calls to borrowers and issuing collection letters and billing statements.
The Department must rely on employers to make the change to borrowers’ paychecks, so it will monitor employers’ compliance with the request to stop wage garnishment. Borrowers whose wages continue to be garnished after March 13 should contact their employers’ human resources department.
Borrowers with defaulted student loans, a current relationship with a private collection agency, and an interest in continuing a prior payment arrangement, consolidating their loans, or beginning a loan rehabilitation arrangement with their private collection agency, should contact the Department’s Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923). Private collection agencies are permitted to provide assistance upon the borrower’s request.