A series of court filings this week are raising concerns about the Trump administration’s management of an unwieldy system for recouping past-due student debt, as thousands of borrowers continue to have their paychecks shorted or await the return of their seized pay.
The Trump administration is fighting a class-action lawsuit for continuing to garnish the wages of defaulted borrowers in violation of a federal order. The administration in March imposed a 60-day moratorium on the collection of defaulted student loans by the federal government during the pandemic, which Congress codified in the stimulus package and extended through Sept. 30.
Consumer advocates say the Education Department has failed to fully carry out the order to the detriment of struggling Americans, while the department insists it is doing everything within its power to get the job done.
Of the 390,000 people who were subject to involuntary collection as of March 13—when President Donald Trump declared a national emergency—nearly 4% were still having money withheld from their paychecks as of May 28, according to court documents. That number is slightly higher than what the department previously reported.
In a court declaration, Mark Brown, chief operating officer in the department’s student aid office, said the problem lies with employers.
“The process of applying the garnishment order to the employee’s wages is wholly dependent on the employer implementing the notice of cancellation,” Brown said. He said the department’s contractor Maximus has called, emailed and mailed notices to employers to stop garnishing wages, but some have continued.
Advocates have accused the Education Department of failing to promptly mail out notices to employers. Brown said Maximus began mailing out notices on April 18, weeks after the moratorium took effect. People familiar with the matter, who were not authorized to speak publicly, previously told The Washington Post that most of the emails the department initially sent remained unopened. And they questioned why the agency failed to deploy all methods of communication from the outset.
Public interest attorneys at the National Consumer Law Center and National Student Legal Defense Network, which are representing borrowers, say the department is trying to abdicate its responsibility to enforce the law.
The Education Department is “styling itself as the passive participant in its own wage garnishment process, with employers exercising ultimate control,” the attorneys wrote in a separate court filing. The agreement “the Department has arranged with employers—and now purports to be incapable of reversing—does not relieve the Department of authority or responsibility for wage garnishment.”
If an employer continues to garnish a borrower’s wages, the Education Department will refund the money it receives. The department said it has returned $171 million to more than 369,000 borrowers through the end of May.
Still, about 21,000 people are waiting for their money because the department does not have valid addresses on file. The agency said it has emailed borrowers asking them to update their information and is working with Treasury to validate mailing addresses through a data match.
But consumer advocates say the lack of current contact information for borrowers is an indication that the department’s system for going after borrowers in default is deeply flawed.
“The department garnished borrowers’ wages without even ensuring they could provide basic information directly to these borrowers, including about how to stop wages from being seized,” said Seth Frotman, executive director of the Student Borrower Protection Center, an advocacy group.
The Trump administration is facing criticism from consumer advocates and liberal lawmakers for its handling of federal relief for borrowers amid the public health and economic crisis.
The Treasury and the Education departments are being sued for withholding nearly $19 million in tax refunds from 11,049 borrowers in violation of another federal order stemming from the pandemic. An Education Department contractor also admitted to incorrectly reporting the suspended student loan payments of millions of borrowers to credit bureaus, resulting in lower credit scores for some.
4 thoughts on “Trump administration still garnishing wages of student loan borrowers during pandemic”
So government trying to refund their money but people being garnished can’t update their addresses so it’s trump fault. Nice headline IBJ.
You really have to squint hard to read this whole article and have this be your only take-away.
Thursday. It says the government stopped but employers still are withholding and they are trying to refund it but don’t have ip to date addresses for people. Take of your Trump derangement syndrome glasses.
It says the government stopped but employers still are withholding and they are trying to refund it but don’t have ip to date addresses for people. Take of your Trump derangement syndrome glasses.