Department of Education Suspending Debt Collection for Defaulted Federal Student Loans

March 25, 2020 Student Loan News 2 Comments

Stack of Dollars



The Coronavirus Debt Collection Suspension Program

Today, the Department of Education announced that it will be suspending debt collection for some borrowers who have Defaulted on Federal Student Loans.

This is one of the many assistance programs being offered to Federal borrowers in the wake of the coronavirus pandemic, and includes a halt on seizures of wages, tax refunds and Social Security benefits for people in default status on Federal debt.

I’ll give the specific details of the update below, but I want to make sure you’re also aware of two other important benefits programs currently on offering, including:

Essentially, anyone who’s income has been impacted by the coronavirus will have access to these Federal Student Loan Relief Programs, which are being put in place for as long as the public health emergency lasts.

Initially, they programs are set to run for 2 months, but they could last for many, many more months if the coronavirus pandemic continues to drag on to and through the Summer.

Please review this post, and my post covering Questions About the Coronavirus and Student Loan Debt, then if you still have any additional questions, feel free to post them in the Comments section below.

I’ll do my best to get you a reply within 24 hours!



Collection is Paused, But Some Will Also Receive Refunds

As part of the program, Department of Education announced that at least $1.8 BILLION in funds already collected with Federal Student Loan Wage Garnishments, Federal Student Loan Social Security Garnishments, and Federal Student Loan Tax Refund Garnishments will be returned to borrowers!

This includes any garnishments that were taken since March 13th, so if you’ve lost money to the Federal Government over defaulted Federal student loans since that date, then you may be looking at getting a refund under this program.

To find out if you may be included in this program, contact the Department of Education, your Student Loan Servicing Company or the Student Loan Debt Collection Agency handling your account and ask them if you’re eligible for the refund.


Private Debt Collectors Should Also Stop Calling

The Department of Education also announced that they’ve requested all Federal Student Loan Debt Collection Agencies to STOP calling borrowers, issuing notices that they owe money, or sending billing statements.

Which means that if you’ve been getting harassed by debt collectors of your defaulted Federal student loans, things are probably about to get strangely quiet for as long as the coronavirus pandemic lasts.

You can still contact the debt collection agency to ask about your loan, and get details about how much you owe, etc., however, so don’t be afraid to contact them if you have questions as they have been ordered to continue offering customer service during this time period.


No New Loans will Be Moved Into Default Either

Finally, Department of Education said that it’s requested that no new defaulted loans will be moved into default status, with the loans transferred to debt collectors for AT LEAST 60 days from March 13th.

What this means is that if you default during the coronavirus pandemic, you’ll at least get a bit of breathing room where you won’t start getting harassed by debt collectors.

However, no one should default during this time, because thanks to the Trump programs allowing you to suspend payments and avoid interest capitalization, there’s no reason to fall into delinquency or default for as long as this crisis continues!


More Help COULD Be on the Way Too!

It’s possible we’ll see even more assistance offered to Federal borrowers in the next couple days/weeks/months as well, because congress is discussing all sorts of additional proposals, including:

Keep checking back regularly here for updates as I will make sure this site gets the latest information out as soon as any news is released regarding any of these pending proposals.

And in the meantime, if you want to look at other assistance programs currently available, check out the programs outlined below!


Help With Federal Student Loans

There are already all sorts of existing benefits programs available to help people with Federal student debt, and now is a great time to read up about them!

I’ve spent the past decade writing over 100 articles on these programs, so you’re bound to find something that can help by checking out the other pages of my site.

For Help with Federal Student Loans, check out my Guides on:



Help With Private Student Loans

And if you have private student loans, the bad news is that there aren’t as many benefits or assistance programs available, but that doesn’t mean you should give up entirely!

If you need Help with Private Student Loans, take a look at my Guides on them, including:

If you have any other questions about student loans, please post them in the Comments section below and I’ll try my hardest to get you a response within 24 hours!



Finally, Please Help Me Out!

Running this website is like working a second full-time job, and I can only continue to do that with your help!

If you found this article useful, then PLEASE share it on Facebook, Reddit, Twitter or wherever you communicate online.

The more people who visit FSLD, the more time I can dedicate to writing up Guides like this one and helping borrowers just like you.

Thank you for visiting, and thank you so much for your support!


Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.

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Tim's experience struggling with crushing student loan debt led him to create the website Forget Student Loan Debt in 2011, where he offers advice, tips and tricks for paying off student loans as quickly and affordably as possible.

2 Comments

  1. Melva Marsha Powell March 26, 2020

    I would like to know what options I have, if any regarding my student loans that is/or was in default since 1990. I say was because I was decieved by Navient collectors to pay 3 consecetive payments of $450.00 for 3 months and I would be eligible to get out of default and eligible to apply for a new student loan in 6 months to go back to school, and my old student loan payments would be $0 as long as I remained unemployed every year when I have to report my income status. Let me tell you a few things first. The technical school I attended in 1989 was a Diploma Mill that misled me about everything from the demand for jobs I was training for would rise and I could transfer my credits to any college if I returned to school. I was training to be a Medical Assistant when Medical Assistant jobs didn’t exist yet. I later discovered I was not eligible to take the CMA exam because my school wasn’t accredited and not recognized by the licensing agency. They tricked me into applying for another loan before I completed by telling me I can’t graduate if I didn’t apply for a $500 loan even though I later found out I only owed the school $100 which I could have payed out of my pocket. I never got a job or certified and they closed shortly after I was finished. At the time I was 23 years old and eligible for VA educational benefits under my father and they wouldn’t let me apply for it. The school reopened under several names since then, and one name they used was Kaplan Career Center. I haven’t worked since 1998 and the interest on the loan has reached $11,000 which is now in the hands of Navient since 2018. I understand Navient is being sued for misleading borrows like the did me. I have to update my income status in August, which has now changed because I moved to California to take care of my son who in paralyzed 2016 from a medical error at a hospital. I am his caregiver and I am paid to take care of him. I know I have been rambling but the student loan has ruined my life and it I applied for a loan for a career that was not heard of back then, but is in high demand today, yet I am not certified as a Medical Assistant so I can’t get a job in that field even though the Department of Education wants me to repay a loan I never benefited from and was misled into signing by a Diploma Mill that isn’t even listed in the School directory. I also read that the new name the school is still enrolling students under has been ordered to close their doors. I should be entitled to a loan forgiveness or discharge. Can you email me back and tell me what options I have? Thank you

    Reply
    • Tim Marshall March 27, 2020

      Hi Melva,

      You’re right that Navient is being sued and I’ve written a specific post about Navient Loan Forgiveness, which you can find here. Take a look at it and maybe you’ll find a way to qualify for forgiveness.

      Here’s the issue though – first, dealing with defaulted loans is not easy, and unless you can find a way to file a claim against the SCHOOL (not the servicer, because it doesn’t matter that Navient lied to you and tricked you, they’re not offering forgiveness benefits for servicer misbehavior…), you might not be able to get rid of this.

      Reply

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