Department of Education failed to stop wage garnishment

On Behalf of | Jun 10, 2020 | Debtors |

Student loans pose a unique threat to the financial stability of borrowers. Attending college in Maryland is not cheap, so these loans are usually for tens of thousands of dollars and are difficult to repay. This is especially true during times when it is difficult to find and maintain a well-paying job. It is also extremely difficult to discharge student loans during bankruptcy, so if someone falls behind on payments, the Department of Education may garnish his or her wages. But what happens when wage garnishment is still going on despite a temporary pause?

In March 2020, the government passed a $2.2 trillion stimulus bill that required the Department of Education to stop garnishing wages and taking tax refunds from people who have defaulted on their student loans. However, around 390,000 people had their wages garnished between mid-March and late May 2020. Some of those borrowers did eventually get their wages returned to them.

The Department of Education has placed blame on employers, who it says are still pulling out portions of their employees’ paychecks. Other than asking those employers to stop, it is not clear what the department is doing to try and stop this practice as borrowers continue to have their wages garnished. Both the Department of Education and the Department of the Treasury are facing lawsuits for garnished wages and tax refunds. According to one lawsuit, the Department of the Treasury took $18.8 million from approximately 11,000 federal tax refunds, then handed it over to the Department of Education.

Wage garnishment can have a profoundly negative effect on someone’s life. If he or she is already struggling and falling behind on payments, then paying other bills with even less income is an even greater challenge. What some people in Maryland might not know is that it is possible to fight wage garnishment. Learning as much about the process as possible can be helpful for men and women who are missing out on their wages or tax refunds.