U.S. Is Sued Over Student Loan Wage Garnishments Amid Crisis

Bookmark

(Bloomberg) -- A New York home health aide whose $13-an-hour job has been scaled back during the pandemic sued the Department of Education for allegedly failing to follow through on a pledge to stop garnishing wages amid the crisis.

As the economic impact of the U.S. lockdown intensified in late March, the department announced a temporary ban on such student loan collections under the $2.2 trillion rescue package. But Elizabeth Barber, 59, said in a lawsuit filed late Thursday that the Trump administration is continuing to cut her paycheck despite the law.

Barber, whose exact hourly wage is $12.89, says she struggled to afford the daily cost of living plus her loan payments even before the coronavirus outbreak resulted in a cut to her hours.

Education Secretary Betsy DeVos on March 27 announced the suspension of all federal wage garnishments for students in default until at least Sept. 30, according to the filing in federal court in Washington, in which Barber seeks to represent a class of plaintiffs. DeVos affirmed the plan in remarks alongside President Donald Trump at a press briefing, adding that she’d asked private collection contractors “to stop all collections correspondence including phone calls, letters, and emails,” according to the filing.

“The Department, more than a month into the six-month emergency suspension period, continues to seize wages from distressed federal student loan borrowers,” Barber’s lawyers with the National Student Legal Defense Network in Washington said in the complaint.

The suit seeks a court finding that the Education Department violated the rescue bill and that all garnishments after March 27 were illegal.

The Education Department doesn’t comment on pending litigation, Press Secretary Angela Morabito said in an email.

“As to the issue more broadly, the Department has taken immediate action to notify employers to stop garnishing wages,” Morabito said, adding that “payments we receive via garnished wages will be immediately processed for refund, and the employer will be contacted again.”

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.