<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Consumer advocates are suing Education Secretary Betsy DeVos for her department’s failure to stop garnishing student loan borrowers’ wages, despite declaring that it would suspend wage garnishment on March 25.&nbsp;” data-reactid=”12″>Consumer advocates are suing Education Secretary Betsy DeVos for her department’s failure to stop garnishing student loan borrowers’ wages, despite declaring that it would suspend wage garnishment on March 25. 

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The class action suit was filed by Student Defense, the National Consumer Law Center, with the support of the Student Borrower Protection Center, against the Department of Education and DeVos.” data-reactid=”13″>The class action suit was filed by Student Defense, the National Consumer Law Center, with the support of the Student Borrower Protection Center, against the Department of Education and DeVos.

“The Trump Administration is taking money from borrowers who are living on the edge of poverty, in the middle of a pandemic, and in violation of the law,” Student Borrower Protection Center Executive Director Seth Frotman said in a statement. “It’s completely outrageous.” 

Frotman added that the organizations were prepared to “do everything in our power to stop Betsy DeVos from further driving struggling borrowers into despair,” adding that this class action lawsuit in particular “shines light on how she has been operating a student debt collection machine that is accountable to no one—and it must be stopped.”

UNITED STATES - MARCH 5: Secretary of Education Betsy DeVos testifies during the Senate Appropriations Labor, Health and Human Services, Education and Related Agencies Subcommittee hearing on the FY2021 budget for the Department of Education in Dirksen Building on Thursday, March 5, 2020. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)UNITED STATES - MARCH 5: Secretary of Education Betsy DeVos testifies during the Senate Appropriations Labor, Health and Human Services, Education and Related Agencies Subcommittee hearing on the FY2021 budget for the Department of Education in Dirksen Building on Thursday, March 5, 2020. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)
Secretary of Education Betsy DeVos testifies during the Senate Appropriations Labor, Health and Human Services, Education and Related Agencies Subcommittee hearing on the FY2021 budget for the Department of Education in Dirksen Building on Thursday, March 5, 2020. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="‘I have no money’” data-reactid=”27″>‘I have no money’

One of plaintiffs, Elizabeth Barber, 59, lives in Penfield, New York, and shared that she had $10,000 in federal student loans. In 2019, she had defaulted on those loans, and she had received a notice of wage garnishment from the government.

ED has an agreement with the U.S. Treasury to withhold money from defaulted borrowers’ federal tax refunds, Social Security payments, to go towards repaying the defaulted loans. 

The department works with employers to carry out wage garnishment for the same outcome. From January this year to April, approximately 12% of Barber’s wages were garnished — around $9,000. 

“I am so worried about how I will get through this,” Barber said in a statement. “I have no money in the bank. I need every dollar I earn at work to survive each day, but my hours have been cut because of the virus. I don’t understand why the government keeps taking my money away after it passed a law that says they will stop.”

Student debt has soared in the 21st century. (Graphic: David Foster/Yahoo Finance)Student debt has soared in the 21st century. (Graphic: David Foster/Yahoo Finance)
Student debt has soared in the 21st century. (Graphic: David Foster/Yahoo Finance)

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="‘Clear violation of federal law’” data-reactid=”43″>‘Clear violation of federal law’

Barber is currently working as a home health aid for older adults and individuals with disabilities, earns $12.89 an hour. In 2019, her total annual income was around $20,000. 

The lawsuit noted that “due to the decrease in demand for her services during the COVID-19 pandemic,” her hours were cut, which reduced her income further. 

The most recent action by ED was when $70.20 from her paycheck was garnished on April 24, 2020. 

“Ms. Barber is struggling to make ends meet, so every dollar counts as she tries to meet her immediate needs,” the lawsuit asserted. She “often has to leave bills unpaid in order to cover her basic needs. She has no money in her checking or savings accounts, is in arrears on various local taxes, and is subject to a lien on her home. She is also past due on both her water and electric bills, which she cannot afford to pay in full each month.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Prior to the crisis, ED was withholding “up to 15% of a borrower’s paycheck to collect on past-due student loan debts,” the groups stated. “In the 2018 fiscal year, the Department of Education seized more than $840 million using wage garnishment, and the Department estimates that approximately 285,000 borrowers were subject to the practice in the last month alone.”&nbsp;” data-reactid=”48″>Prior to the crisis, ED was withholding “up to 15% of a borrower’s paycheck to collect on past-due student loan debts,” the groups stated. “In the 2018 fiscal year, the Department of Education seized more than $840 million using wage garnishment, and the Department estimates that approximately 285,000 borrowers were subject to the practice in the last month alone.” 

Amid the coronavirus pandemic, consumer advocates suing ED argue that the garnishment was illegal, as the CARES Act prohibits such actions through September 30, and hence is in “clear violation of federal law.”

ED has previously announced on March 25 — after U.S. President Donald Trump declared a national emergency — that it would therefore “halt collection actions and wage garnishments to provide additional assistance to borrowers. This flexibility will last for a period of at least 60 days from March 13, 2020.”  

“With the President at her side, Secretary DeVos promised last month that she had stopped federal wage garnishments altogether, which is what the CARES Act requires,” Alex Elson, senior counsel at Student Defense, said in a statement. “The truth is, she keeps on taking wages from the paychecks of Americans struggling to make ends meet. We sued today to make her stop.”

 

 —

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Aarthi is a reporter for Yahoo Finance. She can be reached at [email protected] Follow her on Twitter&nbsp;@aarthiswami.&nbsp;” data-reactid=”58″>Aarthi is a reporter for Yahoo Finance. She can be reached at [email protected] Follow her on Twitter @aarthiswami

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read more:&nbsp;” data-reactid=”59″>Read more: 

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read the latest financial and business news from Yahoo Finance” data-reactid=”66″>Read the latest financial and business news from Yahoo Finance

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Follow Yahoo Finance on&nbsp;Twitter,&nbsp;Facebook,&nbsp;Instagram,&nbsp;Flipboard,&nbsp;SmartNews,&nbsp;LinkedIn,&nbsp;YouTube, and&nbsp;reddit.” data-reactid=”67″>Follow Yahoo Finance on TwitterFacebookInstagramFlipboardSmartNewsLinkedIn, YouTube, and reddit.