US Dept. of Education suspends student loan debt collection

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WASHINGTON (WMTV) -- The Department of Education will halt collection actions and wage garnishments to provide additional assistance to borrowers due to the COVID-19 national emergency.

This flexibility will last for a period of at least 60 days from March 13, according to announcement on Wednesday from Secretary of Education Betsy DeVos.

"These are difficult times for many Americans, and we don't want to do anything that will make it harder for them to make ends meet or create additional stress," DeVos said. "Americans counting on their tax refund or Social Security check to make ends meet during this national emergency should receive those funds, and our actions today will make sure they do."

The department has stopped all requests to the U.S. Treasury to withhold money from defaulted borrowers' federal income tax refunds, social security payments and other federal payments. Such withholdings, known as "Treasury offsets," are permitted by federal law and applied toward repayment of defaulted federal student loans.

DeVos has directed the department to refund approximately $1.8 billion in offsets to more than 830,000 borrowers, according to the release.

The department expects the number of borrowers who will benefit from this relief to increase as servicers work through additional offsets in the queue at the time of this announcement.

The refunds represent offsets that were in the process of being withheld on March 13, when the national emergency was declared and emergency executive actions related to COVID-19 were announced, according to the release.

Private collection agencies have been instructed to halt all proactive collection activities, including making phone calls to borrowers and issuing collection letters and billing statements.

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