Consumer advocates are suing Education Secretary Betsy DeVos for her department’s failure to stop garnishing student loan borrowers’ wages, despite declaring that it would suspend wage garnishment on March 25.
“Secretary DeVos promised last month that she had stopped federal wage garnishments altogether, which is what the CARES Act requires,” Alex Elson, senior counsel at Student Defense, said in a statement. “The truth is, she keeps on taking wages from the paychecks of Americans struggling to make ends meet. We sued today to make her stop.”
The class action suit was filed by Student Defense, the National Consumer Law Center, with the support of the Student Borrower Protection Center, against the Department of Education and DeVos.
“The Department does not comment on pending litigation,” ED Press Secretary Angela Morabito told Yahoo Finance in a statement. “As to the issue more broadly, the Department has taken immediate action to notify employers to stop garnishing wages. The Department’s default loan servicer called employers by phone, sent emails when possible, and mailed letters to employers who could not be reached any other way. ...
Payments we receive via garnished wages will be immediately processed for refund, and the employer will be contacted again to ensure the guidance to stop garnishing wages is understood. The Department relies on employers to stop garnishing wages, but is taking every measure to contact employers and refund garnished wages to borrowers until Sept. 30, 2020.”
Consumer advocates argued that the garnishment is in “clear violation of federal law” since the CARES Act prohibits such actions through September 30.
“The Trump Administration is taking money from borrowers who are living on the edge of poverty, in the middle of a pandemic, and in violation of the law,” Student Borrower Protection Center Executive Director Seth Frotman said in a statement. “It's completely outrageous.”
Frotman added that the organizations were prepared to “do everything in our power to stop Betsy DeVos from further driving struggling borrowers into despair,” adding that this class action lawsuit in particular “shines light on how she has been operating a student debt collection machine that is accountable to no one — and it must be stopped."
‘I have no money’
One of the plaintiffs, Elizabeth Barber, 59, lives in Penfield, New York, and shared that she had $10,000 in federal student loans. In 2019, she had defaulted on those loans, and she had received a notice of wage garnishment from the government.
ED has an agreement with the U.S. Treasury to withhold money from defaulted borrowers’ federal tax refunds and Social Security payments to go towards repaying the defaulted loans.