Are You Having Problems with Government Wage Garnishment on Your Student Loans During COVID-19?

By Tamara Cesaretti | March 30, 2020

On March 25, 2020, the Trump administration announced that it would end wage garnishment for student loan borrowers, going back to March 13 and extending for at least 60 days. This implements an important consumer protection also contained in the stimulus bill passed by Congress last week.

However, this process is not simple.

The government’s debt collection contractors (also known as private collection agencies or PCAs), the Treasury Department, and individuals’ employers, all have a role in the process of halting wage garnishment. Additionally, there is a conflict of interest baked into the process –private collection agencies will not make money if they are not collecting debts, giving them no financial incentive to cooperate.

Of greatest concern, individual employers must take steps to halt the garnishment of their employees wages. Given the stress many companies are facing right now in the midst of crisis, employers may not have the resources to act in a timely manner to enact the executive order and protect borrowers from garnishment.

Lastly, there is an astounding lack of accountability under this executive order — borrowers and employers may not know their rights and responsibilities and borrowers may have little recourse when things go wrong. Even in non-emergency times, we know this can be a challenge, as borrowers have complained of being unable to work with collectors to end their wage garnishments:

“The collection agency . . . is harassing me, and refuses to work with me in order to stop the wage garnishment that they are taking from each paycheck . . . When I have called them to discuss options for stopping the wage garnishment, I am always given different information, and different amounts I will need to pay before the garnishment can stop.”

We are concerned that individuals’ wages continue to be garnished by the government and its debt collection contractors, and we want to help. Your story can help inform lawmakers and regulators as they oversee this process. We do not provide legal representation to individual borrowers, but we can help connect you with resources and additional support.

Only borrowers with loans owned by the federal government are protected by this new law. That means millions of borrowers with private student loans and/or federal student loans made before 2010 by banks and other private lenders may face garnishment unless the private creditor that owns their loan does not act to stop it — a step we have called on the student loan industry to take immediately.

If you have experienced a wage garnishment from March 13, 2020 until today, please fill out this form:

Administrative Wage Garnishment Borrower Response Form

We will continue to closely monitor the student loan system for breakdowns and illegal practices that harm student loan borrowers, including improper wage garnishment and a range of other repayment issues made even more pressing by the coronavirus pandemic. Stay tuned for more updates on these efforts on our blog and our coronavirus resources page.

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Tamara Cesaretti is a Counsel at the Student Borrower Protection Center. Prior to joining SBPC, Tamara was a civil rights policy advocate for both educational opportunities and economic justice at the Lawyers’ Committee for Civil Rights Under Law.