Student loan and interest payments are set to resume on January 31, 2022
Washington, D.C. – U.S. Senator Ron Wyden this week joined colleagues in urging the U.S. Department of Education (USDOE) to suspend administrative wage garnishment of student loan borrowers. The letter comes nearly a month before student loan and interest payments are set to resume on January 31, 2022.
“Currently, over 9 million borrowers are in default on more than $180 billion in federal student loan debt,” Wyden and lawmakers wrote to USDOE Secretary Miguel Cardona. “A disproportionate number of these borrowers are people of color, first-generation college students, veterans, parents, people with disabilities, and students who will not complete college. Even before the devastating COVID-19 pandemic, these borrowers in default were subject to aggressive collection measures, some of which only the federal government can utilize to collect on student loans. In addition to having to pay exorbitant fees, borrowers in default could expect to see their wages, tax refunds, and even Social Security checks confiscated. Low-income families that had their Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) refund checks seized by the federal government were often left in worse situations with limited access to jobs and housing, and fewer resources to cover basic necessities.”
The lawmakers continued by highlighting that the USDOE’s “current intention to resume these collection efforts in a couple of months, as cash-strapped borrowers struggle to recover from a still-ongoing pandemic, will likely result in significant financial harm.” As such, they asked the Department “to automatically remove eligible borrowers from default status” and “to suspend administrative wage garnishment and other forced collections until of the end of the COVID-19 national public health emergency.”
Furthermore, the lawmakers urged the USDOE “to conduct an analysis of the disparate effects of these practices on Black, Latino and Indigenous people with student debt as part of any comprehensive review of the student loan debt collection system.”
The lawmakers concluded that reforming the harmful wage garnishment process “would play a critical role in our nation’s recovery efforts and would protect the most financially vulnerable student loan borrowers. We appreciate your prompt attention to our urgent request.”
The letter was led by Cory Booker, D-N.J., and along with Wyden was co-signed by Senators Elizabeth Warren, D-Mass., Rev. Raphael Warnock, D-Ga., Bob Menendez, D-N.J., Chris Van Hollen, D-Md., Tammy Duckworth, D-Ill., Bob Casey, D-Pa., Mazie Hirono, D-Hawaii, and Sherrod Brown, D-Ohio.
Full text of the letter is here.
A web version of this release is here.