Effective 4/1/20, the Office of the State Controller Will Suspend All Federal Student Loan Garnishments

Effective August 6, 2021

The U.S. Department of Education (Department) announced a final extension of the pause on student loan repayment, interest, and collections until January 31, 2022. The Department believes this additional time and a definitive end date will allow borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults after restart. The Department will continue its work to transition borrowers smoothly back into repayment, including by improving student loan servicing.

"The payment pause has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency," said U.S. Secretary of Education Miguel Cardona. "As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment. It is the Department’s priority to support students and borrowers during this transition and ensure they have the resources they need to access affordable, high quality higher education."

The Department will begin notifying borrowers about this final extension in the coming days, and it will release resources and information about how to plan for payment restart as the end of the pause approaches.

Today’s action is one of a series of steps the Department has taken to support students and borrowers, make higher education more affordable, and improve student loan servicing, including:

Approving $1.5 billion in borrower defense claims, including extending full relief to approved claims and approving new types of claims.
Reinstating $1.3 billion in loan discharges for 41,000 borrowers who received a total and permanent disability discharge and protecting another 190,000 from potential loan reinstatement.
Helping 30,000 small business owners with student loans seeking help from the Paycheck Protection Program.

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The U.S. Department of Education (ED) Office of Federal Student Aid is actively monitoring the new coronavirus/COVID-19 outbreak.

U.S. Secretary of Education Betsy DeVos announced on 3/25/20 that, due to the COVID-19 national emergency, the Department will halt collection actions and wage garnishments to provide additional assistance to borrowers. This flexibility will last for a period of at least 60 days from March 13, 2020. Effective 4/1/20, the Office of the State Controller will suspend all Federal Student loan garnishments. Federal Student loan garnishment payments processed on monthly pay date 3/31/20 and biweekly pay date 4/03/20 have been sent to the U.S. Department of Education. The U.S. Department of Education will refund any garnished wages that should have been stopped as a result of the announcement. The U.S. Department of Education is actively monitoring the COVID-19 national emergency and may extend the 60-day period.

Borrowers with defaulted student loans, a current relationship with a private collection agency, and an interest in continuing a prior payment arrangement, consolidating their loans, or beginning a loan rehabilitation arrangement with their private collection agency, should contact the Department's Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923). Private collection agencies are permitted to provide assistance upon the borrower's request.

On March 27, 2020, the president signed the CARES Act into law which, among other things, provides broad relief for federal student loan borrowers. To provide relief to student loan borrowers during the COVID-19 national emergency, federal student loan borrowers are being placed in an administrative forbearance automatically, which allows you to temporarily stop making your monthly loan payment. This suspension of payments will last until Sept. 30, 2020, but you can still make payments if you choose.

U.S. Department of Education and Federal Student Aid Announcements:

https://www.ed.gov/news/press-releases/secretary-devos-directs-fsa-stop-wage-garnishment-collections-actions-student-loan-borrowers-will-refund-more-18-billion-students-families

https://studentaid.gov/announcements-events/coronavirus

https://studentaid.gov/manage-loans/default/collections#contact-collection-agency