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July 01, 2020

As Pandemic Fallout Deepens, King Pushes Administration to Follow Law and Temporarily Stop Seizing Student Loan Payments

CARES Act suspended all collections of outstanding federal student debt until September 30, but Education and Treasury Departments may be continuing to seize tax refunds

WASHINGTON, D.C. – U.S. Senator Angus King (I-Maine) joined a group of 28 senators in a letter urging the Administration to end the seizure of tax refunds from federal student loan borrowers in default and refund any payments seized in direct violation of federal law. This seizure of tax refunds, known as a tax offset, violates a provision in the CARES Act that suspends the collection of all federally held defaulted student loans until September 30, 2020 – which was intended to provide relief to student loan borrowers experiencing financial strain during the coronavirus crisis and subsequent economic fallout. In the letter to Education Secretary Betsy DeVos and Treasury Secretary Steven Mnuchin, the senators raised concerns about the reported garnishment of federal tax and state refunds from Americans with defaulted student loans.

“More than 1 million borrowers default on their loans each year. At a time when income inequality is increasing at a staggering rate, rents are skyrocketing and wages are stagnant, this massive debt on the backs of nearly 45 million Americans is too heavy to bear. Now, unemployment is at the highest level since the Great Depression and millions of Americans are facing impossible financial choices,” the senators wrote. “Congress recognized the financial strain on student loan borrowers and was clear in the CARES Act: student loan borrowers need relief during this ongoing economic upheaval caused by the COVID-19 pandemic.”

“We urge you to immediately stop all offsets of tax refunds and return these amounts to borrowers in accordance with the CARES Act,” the senators concluded.

The full letter can be read HERE.  

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