WASHINGTON (CN) — Two months into a pandemic that has caused the worst economic downturn since the Great Depression, the government has not gotten a handle on ensuring that Americans don’t see their wages garnished to pay off student loans.
The Department of Education was supposed to have frozen the practice for six months beginning March 27, as required when Congress passed the first version of the coronavirus relief bill known as the CARES Act.
Education Secretary Betsy DeVos acknowledged Monday, however, that the effort is a work in progress: About 54,000 workers had their wages garnished as of May 7. This is about 14% of the 390,000 Americans who saw March wages garnished.
Responding to a lawsuit from the National Student Legal Defense Network, DeVos noted that her agency instructed nearly 37,500 employers to halt the practice Monday. Over the weekend, it assured some 83,500 borrowers in default that their wages would not be garnished.
Alex Elson, senior counsel for the National Student Legal Defense Network, balked Tuesday at what this means in the here and now.
“For borrowers already worried about affording rent, groceries, and medication, losing part of each paycheck to an unlawful garnishment is enough to push them into truly dire circumstances,” Elson said in a statement.
To the secretary’s credit, however, another group noted Tuesday that what is being asked of the agency here has no modern parallel.
“I’ve been through my share of disasters — 9/11, Katrina, California wildfires,” Betsy Mayotte, president of the Institute of Student Loan Advisors, said in an interview. “I’ve seen my share of different options for relief. I’ve never seen anything like this. These were unprecedented and really significant system changes that needed to be made.”
In the lawsuit from National Student Legal Defense Network, Elizabeth Barber, a home health aide, notes that she has lost up to 15 hours of work per week during the pandemic.
The 59-year-old from Penfield, New York, amended her complaint Monday to include claims from Florida-based borrower Craigory Lee A. Jenkins, who had wages taken out of her May 8 paycheck from Lowe’s Home Improvement.
“The CARES Act’s reprieve from wage garnishment was supposed to help named plaintiffs and the class — immediately,” the amended complaint states.
U.S. District Judge Carl Nichols is presiding over Jenkins and Barber’s suit in Washington. The Trump appointee has ordered them and the government to submit additional filings on whether the Department of Education should continue to provide periodic status reports on its efforts.
Mayotte with the Institute of Student Loan Advisors noted that, under normal circumstances, it can take several pay cycles to stop wage garnishments.
“I really hesitate to point fingers because I don’t know,” Mayotte said. “Is the issue mainly with the employers? Is the issue mainly with one or two collection agencies that dragged their feet in sending the notices out in the first place?”
In some respects, she emphasized, the government acted swiftly to ease the burden of loan payments — enacting zero-percent interest rates, for example. But other plans to provide emergency relief to borrowers have stalled.
“Have there been glitches? Absolutely,” she said. “This was one of them.”