U.S. Department of Education Secretary Betsy DeVos directed FSA to stop wage garnishment, and collections actions for student loan borrowers. The U.S. Treasury will refund more than $1.8 billion to students and families.
At the Secretary’s direction, the Department has stopped all requests to the U.S. Treasury to withhold money from defaulted borrowers’ federal income tax refunds, Social Security payments, and other federal payments. Such withholdings, known as “Treasury offsets,” are permitted by federal law and applied toward repayment of defaulted federal student loans.
At the same time, the Secretary directed the Department to refund about $1.8 billion in offsets to more than 830,000 borrowers.
The refunds represent offsets that were in the process of being withheld on March 13, 2020, the date President Donald J. Trump declared a national emergency and announced emergency executive actions related to COVID-19. The Department expects the number of borrowers who will benefit from this relief to increase.
Private collection agencies also have been instructed to halt all proactive collection activities, including making phone calls to borrowers and issuing collection letters and billing statements.
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