Federal Student Loan Collections and Wage Garnishments Temporarily Put On Hold

Politico is reporting, “DEVOS HALTS COLLECTION OF DEFAULTED FEDERAL STUDENT LOANS: The Education Department is putting a stop to collecting on defaulted federal student loans amid the coronavirus and ordering private collection firms to stop pursuing borrowers “until further notice,” according to the official and a memo sent to the companies. The department plans to make the policy retroactive to March 13, the day President Donald Trump declared a national emergency, the official said.” More can be found here.

“Department officials have ordered the private companies it hires to collect defaulted loans to immediately stop calling borrowers, sending collection notices or taking steps to seize portions of their paychecks, according to a memo viewed by POLITICO.”

Allegedly, the stimulus bill in the Congressional works will suspend all federal student loan payments for six months. At the time I am writing this, it is not finalized.

This action is supposed to also stop Social Security and other wage garnishments.

If you wind up benefiting from this action please keep in mind this is temporary and will end at some point and you’ll still have to face dealing with your student loan defaults.

This is a respite, not a solution.

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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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