The Education Dept. can't find 11,000 student-loan borrowers to issue refunds for illegally garnishing paychecks during the pandemic
By: Business Insider
August 24, 2021 at 14:03 PM EDT
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Wage garnishment, or withholding someone's wages until a debt is paid off, was prohibited for certain student-loan borrowers under the CARES Act for the duration of the pandemic.
But a Freedom of Information Act (FOIA) request revealed the Education Department continued to garnish wages of borrowers, and nearly 11,000 of them still have yet to receive refunds because the department simply cannot find them.
The Education Department responded last week to Student Defense, which works to protect students' rights. According to the response, as of July 19, the Federal Student Aid (FSA) office had issued refunds of garnished payments to 382,306 borrowers totaling $187 billion, but 10,868 borrowers who are owed a refund have not yet received it because the department does not have their correct addresses on file.
"The Department of Education illegally took this money from student loan borrowers, and it's their responsibility to figure out how to return it," Dan Zibel, chief counsel and co-founder of Student Defense, told Insider. "In the meantime, this shows that the Department has no business restarting administrative wage garnishment anytime soon."
The department must notify an employer to stop withholding money from a borrower's paycheck, but, as The Washington Post reported last year, Education Secretary Betsy DeVos was slow to send those notices out, leading Student Defense to sue DeVos in April 2020 for violating the CARES Act.
Last month, Insider reported that 23 Democrats were worried about "plunging" borrowers back into repayment without a long-term plan for protecting their wages and credit scores.
They wrote in a letter to Education Secretary Miguel Cardona that although the CARES Act initially paused student-loan payments during the pandemic, the Education Department and Treasury Department still "improperly garnished and withheld" over $200 million from about 390,000 borrowers during this time.
"Even before the coronavirus disease 2019 (COVID-19) pandemic, collections on defaulted student loans were catastrophic for borrowers in default, who saw their wages, tax refunds, and even Social Security checks confiscated, in addition to being forced to pay exorbitant fees," the Democrats wrote.
The Education Department did not immediately respond to Insider's request for comment.