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Wage Garnishment for Student Loans during COVID-19 Crisis

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Editor's note: This article has been updated to reflect the extension of the student loan forbearance period until the ED is permitted to implement the debt relief program or the litigation is resolved.​

Department of Education (ED) has suspended garnishment on federally held student loans in response to the Coronavirus pandemic. Interest on these loans is also suspended during this time.

ED announced that due to the COVID-19 national emergency, the Department will halt collection actions and wage garnishments. ED will send human resources departments letters instructing them to stop wage garnishment. The student loan payment pause is extended until the ED is permitted to implement the debt relief program or the litigation is resolved. Payments will restart 60 days later.

If the debt relief program has not been implemented and the litigation has not been resolved by June 30, 2023 – payments will resume 60 days after that. ED will notify borrowers before payments restart.

This only includes loans owned by the ED, including Direct Loans, as well as Federal Perkins Loans and Federal Family Education Loan (FFEL) Program loans held by ED. Loans owned by commercial lenders or held by the institution a student attended are not eligible for this benefit at this time.

Suspension of Interest

On March 13, 2020, the president announced that interest would be waived on federally held student loans for a period of 60 days. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides further flexibility by allowing most holders of student loans to suspend monthly payments without any interest accruing.

It is not advisable for employers to automatically stop payments without notice from the employee or the lender. Districts may not know who the loan holder is and whether they’re included in the ED garnishment suspension. While garnishments will be stopped during this period, employees making loan payments on their own may want to continue payments because 100 percent of the payment is applied to the principal while the interest is waived.

Employee Communications

Districts may want to reach out to employees with student loans to provide them with the link to the ED guidance and advise them to contact their lender or the district to arrange for payments to stop because of the suspension of interest.

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April Mabry
April Mabry
Best Practices: Salary Notification Letters

April Mabry oversees HR Services training services, member library products, and the HRX newsletter. She has provided HR training and guidance to Texas public schools  since 1991. Mabry was a classroom teacher for 11 years in Texas and Michigan.

Mabry has a bachelor’s degree in education from the University of Michigan and certification as a professional in human resources (PHR) and is a SHRM-CP.

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TASB HR Services supports HR leadership in Texas schools through membership offerings in specialized training, consulting, and other services.

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