Report Calls Out Ed. Dept. For Continuing Garnishments During COVID-19 Moratorium

The Department of Education continued to garnish wages of individuals with defaulted student loans long after a moratorium on collections was put in place in March 2020 at the onset of the COVID-19 pandemic, according to a report released by a student loan advocacy group.

The Student Borrower Protection Center, relying on data obtained via a Freedom of Information Act request, revealed that garnishments on some accounts occurred through August 2021, with “hundreds of borrowers having tens of thousands of dollars illegally removed from their paychecks in the intervening months.”

A copy of the report can be accessed by clicking here.

The report caught the eye of Sen. Elizabeth Warren, who issued a statement sharing her thoughts. “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,” she said. “The U.S. Department of Education must halt these harmful debt collection practices once and for all and ensure compliance with the law.”

More than 8 million individuals were in default on their student loans when the moratorium was put in place. In the 12 months leading up to the moratorium, 1.2 million new individuals went into default on their student loans.

The Education Department was “powerless” to implement the protections needed for defaulted borrowers as required by law, the report claims. The complexities associated with halting garnishments on so many accounts was overwhelming, and made all the more difficult because the Education Department lacked contact information for tens of thousands of employers, and some employers did not respond to communications from the Department. The company servicing the garnishments had so many borrowers that it was unable to locate that it created a special reporting code when filing reports with the Education Department.

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