U.S. Education Secretary Betsy DeVos has directed the Federal Student Aid (FSA) office to halt collection actions and wage garnishments against students who have defaulted on their education loans.
According to a press release, DeVos’s department will refund more than $1.8 billion to more than 830,000 students in default in order to provide assistance during the coronavirus crisis.
DeVos said in a statement:
These are difficult times for many Americans, and we don’t want to do anything that will make it harder for them to make ends meet or create additional stress. 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.
To minimize the impact of Coronavirus on our nation’s students, @usedgov is temporarily waiving all interest on federally held student loans.@BetsyDeVosED has also directed federal lenders to allow borrowers to suspend their student loan payments for at least the next 60 days. pic.twitter.com/wom7S5u4YU
— The White House (@WhiteHouse) March 22, 2020
The period of flexibility is retroactive from March 13, the date President Donald Trump declared a national emergency, and will continue for at least 60 days from that date.
The education department has halted all requests to the U.S. Treasury to deny funds from defaulted borrowers’ federal income tax refunds, Social Security payments, and other “Treasury offsets.”
DeVos has also instructed private collection agencies to stop their activities to obtain payments from student borrowers.
Trump announced students with federal loans would automatically have their interest rates dialed back to 0 percent for a period of at least 60 days. Students may also suspend their loan payments for at least two months to allow greater flexibility during the emergency situation.
Education department site studentaid.gov states:
To provide relief to student loan borrowers during the COVID-19 national emergency, federal student loan borrowers can be placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment.
Students and families with further questions about their federal student aid during school closures can visit the same site for assistance.