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Media Press Releases Uncovered Documents Expose the Government’s Stunning Failure to Control its Student Loan Collection Machine During the COVID-19 Pandemic

Uncovered Documents Expose the Government’s Stunning Failure to Control its Student Loan Collection Machine During the COVID-19 Pandemic

New Evidence Shows the Department of Education Has Even Less Power than Previously Known to Shut Off Runaway Wage Garnishment; Advocates Demand the Government Not Throw Borrowers Back into a Broken System

December 15, 2022 | WASHINGTON, D.C. — Today, the Student Borrower Protection Center (SBPC) published the results of an investigation that lays bare the federal government’s harmful failure to manage its student debt collection apparatus during the COVID-19 pandemic. The report, Collections Catastrophe: New Evidence Exposes Fundamental Failures of the Federal Government’s Student Loan Collection Machine, reveals that the Department of Education (ED) may be powerless to implement protections for defaulted borrowers as required by law and that it struggled to end illegal garnishments during COVID-19 for far longer and in much more profound ways than previously known. 

In light of their findings, experts are calling on ED to discontinue the use of administrative wage garnishment—a tool it is not required to use—until ED is certain that the collection system can operate within the law.

“Our findings demolish any illusion that the Department of Education might have its arms around its ravenous debt collection machinery,” said Persis Yu, SBPC Deputy Executive Director & Managing Counsel. “In the face of a pandemic that resulted in economic chaos for millions of families, borrowers were trapped in a garnishment system that is fundamentally incapable of operating within the law—and a federal government unwilling and unable to hold it accountable for breakdowns. If ED can’t guarantee that its debt collection tool can comply with consumer protections, it should never turn this machinery on again.”

“Even before the public health and economic crises created by the COVID-19 pandemic, nearly 45 million Americans were burdened by student loans and hundreds of thousands of student loan borrowers were having their wages garnished for past due payments,” said Senator Cory Booker. “This report shines light on a troubling issue that’s been going on for far too long. Urgent steps are needed to reform the harmful wage garnishment process in order to protect the most financially vulnerable student loan borrowers.”

“This alarming report reveals our government failed to protect some of the most vulnerable student loan borrowers from illegal wage garnishments during the COVID-19 pandemic,” said Senator Elizabeth Warren. “The U.S. Department of Education must halt these harmful debt collection practices once and for all and ensure compliance with the law.”

“This investigation is a troubling reminder of what we already knew: the predatory debt collection system is out of control. It’s clear that under two Administrations–one with contempt for the people and one with compassion–the agency was unable to reign in these unconscionable and explicitly banned wage garnishments,” said Representative Ayanna Pressley. “For folks in the Massachusetts 7th, that can mean the difference between making rent, affording childcare, or tucking a few dollars away in savings for their kid—or being plunged into further financial ruin. We must work together with the Department of Education to immediately halt garnishment and fundamentally overhaul this broken system.”

SBPC’s new report is available here: Collections Catastrophe: New Evidence Exposes Fundamental Failures of the Federal Government’s Student Loan Collection Machine.

The report reveals that:

  • ED continued to illegally garnish defaulted borrowers’ wages for nearly a year longer than has been previously reported; 
  • ED’s capacity to halt ongoing garnishments was systemically stymied by widespread and previously unknown operational failures; and 
  • ED may have downplayed the extent of ongoing garnishments to a court overseeing a case related to its illegal collection actions. 

Moreover, the report brings to light the stories of hundreds of consumers harmed by wage garnishments despite protections that were put in place by Congress and the legal obligations of the Biden Administration to protect borrowers. It also provides evidence that ED explicitly chose not to shield expanded COVID-related unemployment checks from student loan repayment—thereby likely ushering tens of thousands of borrowers into default. 

ED Has Even Less Control Over its Wage Garnishment Machinery than Previously Understood

In July 2021, the National Student Legal Defense Network (Student Defense) submitted a Freedom of Information Act (FOIA) request to ED seeking various documents and communications related to ED’s administrative wage garnishment (AWG) system. ED eventually produced roughly 2,000 pages of reports, communications, and other records concerning its management of the AWG program during the COVID-19 pandemic. The documents ED produced highlight the massive toll that the federal government’s debt collection machinery illegally and unnecessarily imposed on borrowers.

The full set of records that ED produced in response to Student Defense’s FOIA request is available here.


Advocates have warned for years that the federal government’s system for collecting on defaulted federal student loan borrowers is predatory both by design and implementation, and that it disproportionately harms low-income borrowers and Black and Latino communities. Leveraging the ability to garnish borrowers’ wages, offset Social Security checks, and seize badly-needed benefits such as Child Tax Credit payments—all without a court order—ED is now one of the most aggressive debt collectors in the nation. Further, a growing pile of evidence establishes that ED cannot ensure that this collection machinery follows the law. 

In March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act required ED to halt debt collection for most student loan borrowers, including through wage garnishment. However, subsequent court filings and investigations show that ED and its contractors were unable to do so, and borrowers instead continued to struggle under the weight of a broken student loan system. 

Further Reading

Read more on the federal student loan debt collection system’s failure during COVID:

Read SBPC’s collection of narratives from borrowers nationwide who experienced harmful, illegal garnishments in 2020: Borrower Voices: The Impact of Wage Garnishment During the Coronavirus Pandemic

Read SBPC’s paper series proposing a new path forward to protect student loan borrowers in default that proposes new solutions and alternatives to involuntary collections: Beyond Fresh Start: Addressing the Flaws of the Current Student Loan Collection System


About Student Borrower Protection Center

The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.

Learn more at or follow SBPC on Twitter @theSBPC.

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