USA TODAY US Edition

Feds to stop student loan collection for those behind

- Chris Quintana

WASHINGTON – Many student loan borrowers far behind on their payments will see the federal government easing collection efforts as part of its response to the financial uncertaint­y as coronaviru­s spreads.

The federal government will no longer withhold portions of borrowers’ tax returns and Social Security payments, the Education Department said Wednesday. And borrowers whose paychecks were garnished will be entitled to their full wage – although their employers must make the change to their paycheck.

That relief is mostly for people who have been missing payments for months. But more help may be coming for all borrowers with federal student loans. The roughly $2 trillion stimulus bill unveiled Wednesday would suspend federal student loan payments without interest accruing through Sept. 30. It does not feature debt forgivenes­s.

The government has already set the interest rate on federal student loans to zero for at least two months. Borrowers with federal loans also may suspend their payments for at least two months.

The latest directive on collecting on defaulted loans will last at least 60 days, and it’s backdated to March 13.

“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,” said Betsy DeVos, the U.S. education secretary.

A borrower’s wages or tax returns aren’t immediatel­y seized when a payment is first missed. Rather, borrowers who haven’t made a payment in more than 270 days are likely to see this type of wage garnishmen­t and benefit from the newly announced relief.

The relief isn’t automatic, however. Employers will have to make the changes to borrowers’ paychecks, the Education Department said. Borrowers should contact their human resources department if their wage continues to be garnished.

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