The Trump administration in March imposed a 60-day moratorium on the collection of defaulted student loans by the federal government during the novel coronavirus pandemic, which Congress codified in the last stimulus package and extended through Sept. 30.
Despite the order, people have complained of their wages still being garnished. A group of borrowers filed a class-action lawsuit in April against Education Secretary Betsy DeVos and the Education Department for allegedly mismanaging the moratorium. A federal judge in the case requested the department produce a report on its progress in suspending garnishments.
In the court report, the Education Department said 390,000 people were subject to involuntary collection as of March 13, a much higher number than the 285,000 previously reported. Of those borrowers, nearly 14 percent were still having money withheld from their paychecks as of May 7.
Justice Department attorneys representing DeVos and the Education Department said in the report the agency is “continuing to endeavor to halt all wage garnishments,” but did not elaborate on what’s holding up the process.
The Education Department has suggested the problem lies with employers. Although the department instructs employers to cease garnishment, companies must take action to end involuntary collection. The department said it has called and emailed employers to stop garnishing wages, but some have continued.
Advocates have accused the Education Department of delaying the moratorium by failing to promptly mail out notices to employers. People familiar with the matter, who were not authorized to speak publicly, previously told The Washington Post that most of the emails the department sent remained unopened. And they questioned why the agency failed to deploy all methods of communication from the outset.
“For borrowers already worried about affording rent, groceries, and medication, losing part of each paycheck to an unlawful garnishment is enough to push them into truly dire circumstances,” said Alex Elson, an attorney at the National Student Legal Defense Network, a nonprofit organization representing borrowers in the lawsuit.
On Monday, the department mailed letters to nearly 37,500 employers who have continued to garnish wages, with a list of employees whose wages they should stop garnishing. Department staff are also making additional calls to employers to confirm they’ve been notified and will cease withholding money on the government’s behalf.
“The department has notified employers of defaulted borrowers to stop garnishing wages,” said Angela Morabito, a spokeswoman for the Education Department. “Because some employers have continued to improperly garnish wages, we have taken additional steps to get employers to comply.”
Morabito said the department has also mailed letters to 83,500 defaulted borrowers explaining that their employers should stop garnishing wages and assuring them that the federal agency will quickly refund the money. The federal agency is also trying to contact another 4,400 people who did not have valid addresses on file. The department encourages borrowers to provide the letter to their employers as evidence their wages should not be reduced.
The number of letters sent to borrowers is much higher than the 54,000 figure the department reported to the court, but the agency did not provide an explanation for the discrepancy.