Student Loan Related

Yes, It’s True, the Department of Education Can’t Stop Garnishing People That Don’t Owe Money

Written by Steve Rhode

The next installment of the 2017 lawsuit against the Department of Education played out recently.

The issue surrounds students who went to a Corinthian College that was supposed to forgive all the federal student loan debt of students who were the victims of education fraud.

Yesterday U.S. Magistrate Judge Sallie Kim who is hearing the case displayed her anger and displeasure that the Department of Education, through their servicers, was still attempting to collect or garnish wages from students that should not only have their loans forgiven but get refunds as well.

According to Politico, “Whether it’s contempt or whether it’s sanctions, I’m going to entertain them,” Kim said during the hearing, according to an audio recording provided by the court to POLITICO. She added: “I’m not sending anyone to jail yet, but it’s good to know I have that ability.”

“There have to be some consequences for the violation of my order 16,000 times,” Kim said, referring to the number of borrowers whose loans the department admitted last month it had erroneously sought to collect.

The court date is particularly interesting because you can listen to the 26-minute exchange, below.

Newsweek said, “At least 1,800 people reportedly lost wages or tax refunds according to the filing.

“At best it is gross negligence, at worst it’s an intentional flouting of my order,” Kim said.”

“Once DeVos took over the Department of Education in 2017, numerous attempts were made to limit the scope of the program, in addition to effectively ignoring roughly 160,000 applications made for loan forgiveness, according to a New York Times report.”

  • The Department demanded incorrect loan payment from 16,034 students
  • Of those students, 3,289 student borrowers made one or more loan payments because of these demands, which they were not actually supposed to pay
  • The Department has still not confirmed that 1,147 students’ loans are in the correct status, leaving those students in limbo
  • The Department has harmed the credit of 847 non-defaulted students
  • The Department subjected 1,808 students to involuntary debt collections (garnished their wages or taken their tax refunds or benefits) – Source



About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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