Student loans and wage garnishments under the CARES Act

Student loans and wage garnishments underneath the CARES Act

Student loans and wage garnishments under the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act “CARES Act” (handed by Congress on March 27, 2020) gives garnishment aid to some federal student loan debtors till September 30, 2020. The CARES Act gives “during the period in which the Secretary [of Education] suspends payments on a loan [through September 30, 2020] the Secretary shall suspend all involuntary collection related to the loan, including . . . wage garnishments authorized under section 488A of the High Education Act of 1965 (20 U.S.C. 1095a) or section 3720D of title 31, United States Code[.]” The CARES Act additionally requires the Secretary to offer discover to debtors, no later than 15 days after March 27, 2020, of the actions taken to droop garnishments. 

Of course, the principles on loan forbearance and garnishment aid should not so simple as they might seem at first. The solutions surrounding matter questions typically rely upon who holds or owns the loan. The Secretary’s requirement to droop loan funds and garnishments solely applies to loans “that are held by the Department of Education.” Thus, not all federal student loan garnishments are required to cease (i.e., the act’s provisions don’t apply to FFEL Program loans owned by business lenders or college-owned Perkins loans). Prior to discontinuing an worker’s garnishments as a consequence of a federal loan assortment, employers ought to contact the gathering company and/or loan servicer to find out if the loan is held by the Department of Education. At this time, loan servicers and businesses holding federal student loans who should not the Department of Education seem to have discretion on whether or not or to not stop garnishments. Also, staff qualifying for federal loan garnishment aid ought to obtain discover from the Department of Education. If an worker gives the employer with discover of garnishment suspension, the employer ought to nonetheless affirm with the gathering company and/or loan servicer. Unilaterally stopping garnishments with out first inquiring if the Department of Education holds the loan might have authorized penalties. 

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If the employer has garnished an worker’s wages after the enactment of the CARES Act, the employer doesn’t have to take any motion because the Department of Education has dedicated to refunding a borrower’s garnished wages acquired between March 13, 2020, and September 30, 2020. The Department of Education has additionally revealed a useful Q & A on student loan garnishments.

Keep in thoughts that new steerage is being offered virtually each day by the U.S. DOE, ODE and different entities on numerous subjects affecting faculty districts. This steerage and recommendation is predicated on the data often called of this date.

This is for informational functions solely. It just isn’t meant to be authorized recommendation and doesn’t create or indicate an attorney-client relationship.

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