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Education Department and Betsy DeVos are being sued by student borrower groups for seizing student borrowers’ paychecks during covid-19 pandemic

Student at Laptop Computer Watch Tea Blue Blouse-849825_1920In a class action lawsuit filed against the U.S. Department of Education and Secretary Betsy DeVos, student borrower groups are asking the department to stop garnishing student borrowers’ wages.

Illegal garnishments

The CARES Act prohibits the department from garnishing wages of student borrowers through Sept. 30, 2020. The lawsuit was filed last week on behalf of distressed borrowers whose paychecks continue to be seized in violation of federal law.

“With the President at her side, Secretary DeVos promised in March that she had stopped federal wage garnishments altogether, which is what the CARES Act requires,” said Alex Elson, senior counsel at Student Defense. “The truth is, she keeps on taking wages from the paychecks of Americans struggling to make ends meet. We sued to make her stop.”

Lawsuit by student borrower group

“Right now, low-wage workers hit hardest by the economic impact of the pandemic need their paychecks to keep food on the table and a roof over their heads,” said Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project.

“The Trump Administration is taking money from borrowers who are living on the edge of poverty, in the middle of a pandemic, and in violation of the law,” said Seth Frotman, executive director for the Student Borrower Protection Center.

The department has the authority to garnish the wages – without a court order – of individuals who default on their federal student loans, withholding up to 15 percent of a borrower’s paycheck to collect on past-due student loan debts. In the 2018 fiscal year, it seized more than $840 million using wage garnishment, and the department estimates that about 285,000 borrowers were subject to the practice in the last month alone.

In the CARES Act, Congress gave most federal student loan borrowers a six-month reprieve from paying back their loans, and prohibited the Department of Education from using involuntary collection practices, including wage garnishment, against borrowers in default.

But for many other borrowers, that hasn’t been the case. Guidance on the department’s website states that borrowers may continue to see their wages garnished, promising a refund at a future time – a practice that doesn’t satisfy the requirements of the CARES Act and ignores the urgent current financial needs of borrowers during the coronavirus pandemic, the groups said in their lawsuit.

Over the past month, the Student Borrower Protection Center has been flooded with stories from borrowers across the country who are seeing their wages seized.

Lawmakers concerned

After reports of illegal garnishment, Senator Cory Booker and Congresswoman Ayanna Pressley led a group of more than 40 members of Congress in sending a letter to DeVos and Steven Mnuchin, treasury secretary, criticizing the action. The lawmakers called on DeVos to issue guidance halting all involuntary collections immediately and to provide a clear timeline for refunds to borrowers who have had wages garnished since the new protections were put in place.

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