Department of Education Paid Student Loan Wages Despite Covid-19 Moratorium, But 11,000 Borrowers Still Need Reimbursement

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The US Department of Education still owed nearly 11,000 student loan borrowers to repay their student loans.

Here’s what you need to know.

Student loans

As reported Washington PostIn response to a Freedom of Information Act request, the US Department of Education released data showing that 10,868 student loan borrowers are still awaiting reimbursement because their wages were inappropriately channeled to pay off student loans. This is despite the imposed federal moratorium that has prevented pay cuts due to the Covid-19 pandemic.


Student Loans: Temporary Exemption From Student Loans

In March 2020, Congress passed the Care Act, a $ 2.2 trillion stimulus package that provided significant financial assistance to federal student loan borrowers, including:

  • No mandatory payments on a federal student loan;
  • 0% interest on federal student loans; and
  • Impossibility to collect student loan debt in case of default

Traditionally, the federal government has been able to collect student loans in the event of default, for example by withholding wages. However, pursuant to the Nursing Act, the withholding of wages to collect student loan arrears was temporarily suspended. Both President Donald Trump and President Joe Biden have extended the student loan exemption twice, and it will expire on January 31, 2022. However, despite a moratorium on student loan debt collection, the Department of Education continued to cut salaries after Trump’s signing. The care law becomes the law.


Fixing student loans by refunds for improper withholding of wages

The Department of Education is working to correct an administrative error. By July, the Department of Education had issued $ 187 billion in reimbursements to 382,306 student loan borrowers. Washington Post reported. However, the Department of Education is unable to repay nearly 11,000 student loan borrowers because the student loan borrowers do not have a valid address. However, the Department of Education has cleared the data with the US Treasury Department to find updated addresses of student loan borrowers and contact employers to stop receiving wages from affected student loan borrowers’ checks. The National Student Advocacy Network, a nonprofit advocacy for student loans that made a Freedom of Information request, filed a class action lawsuit against the Trump administration last year, alleging that the Department of Education failed to enforce student loan benefits by improperly withholding wages. in the amount of student loan borrowers.

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