Leading Democrats on Senate education and tax revenue committees on Thursday expressed concerns that the IRS continues to withhold student loan payments owed from borrower tax refunds, despite a ban in the CARES law.
Sen. Ron Wyden, the leading Democrat on the Finance Committee, and his Health, Education, Work and Pensions Committee counterpart Senator Patty Murray have asked Treasury departments and education in a letter how many repayments have been seized from borrowers since the passage of the coronavirus relief program in March.
Congress, in response to rising unemployment during the coronavirus pandemic, had, in the CARES Act, exempted most student loan borrowers from making payments until September 30. wages or other involuntary collection measures.
Consumer groups, however, charge that debts are withheld from tax refunds. Last month, two consumer groups, Student Defense and Democracy Forward, filed a federal class action lawsuit against U.S. Treasury Secretary Steven Mnuchin and Education Secretary Betsy DeVos, pointing to data on the Treasury website that said $ 19 million was seized and sent to the Department of Education. since April 1.
The Education Department said it was working to get the Treasury Department to repay the money it seizes from borrowers more quickly. Education Ministry spokeswoman Angela Morabito, responding to the letter signed by 28 Senate Democrats, said the processing time for making refunds has been reduced from several weeks to four to five working days.
The ministry said it was also working with loan departments to get employers to stop garnishing wages for unpaid student loans. The number of employers with garnishments has fallen by almost 99%, but the ministry has acknowledged that nearly 3,600 are still garnishing the wages of around 5,000 borrowers.
Senators wrote in the letter: “Unemployment is at its highest since the Great Depression and millions of Americans face impossible financial choices. Congress has recognized the financial pressure on student loan borrowers and has been clear in the CARES Act: Student loan borrowers need relief during this ongoing economic upheaval caused by the COVID-19 pandemic. “