Student loan debt has been a constant battlefield for the U.S. Department of Education under current Secretary of Education Betsy DeVos. U.S. courts have had to sue her personally over contradicting their orders about pursuing debt from those defrauded by for-profit schools. She has made the pursuit of student loan money her primary cause in this office. So it comes as a surprise, a welcome one, to hear the latest news from the Department of Education: student loan relief is coming—for some, anyway.
On March 25, 2020, during a month which has seen American unemployment more than double due to the impacts of the coronavirus pandemic, the DOE plans to announce a suspension of debt collection efforts against federal education loan borrowers who are already in default on student loans held by the DOE. The student loan relief does not apply to other defaulted federal student loans held by guaranty agencies and colleges, nor does it apply to private student loans.
The suspension applies only to involuntary debt collection efforts such as wage garnishment, withheld social security payments, and interception of federal tax refunds or stimulus checks. It is effective immediately, retroactive to March 13, 2020, and currently has no end date. Any tax refunds in the process of being seized due to student loan default will be returned to borrowers.
Some people will be frustrated that the suspension only applies to involuntary loan repayments. Student loans in good standing that are already being repaid normally should continue to be paid. But if circumstances require that an individual lets their loan payments slip, they will be protected from garnishment while they’re trying to get back on their feet.
For borrowers in good standing, though, there are also possible options. On March 20, 2020, DeVos announced that a temporary, interest-free administrative forbearance would be available to borrowers who need to suspend making payments. Student loan considerations were originally part of the stimulus bill working its way through legislation, but that measure disappeared between the House and Senate.
Approximately one third of Americans under the age of 30 have student debt, or around 27 million people. Over 8 million of those are in default to some extent. Relieving them of garnishment allows them to keep their homes, feed their children, and take care of their health in this time of crisis. Enacting student loan relief during this troubled time is a choice which will pay the public large dividends.