The objective of our review was to evaluate the results of Federal Student Aid’s (FSA) process for suspending involuntary collection and refunding payments involuntarily collected on defaulted Department-held loans in response to the Coronavirus pandemic.
FSA generally achieved positive results in suspending and refunding most involuntary collections on defaulted Department-held loans, as required by the Coronavirus Aid, Relief, and Economic Security Act. However, as of October 23, 2020, FSA continued to receive administrative wage garnishments for 1,930 borrowers. Although FSA refunded most administrative wage garnishments and Treasury offsets collected for the period of our review, it did not reprocess all refunds that were subsequently returned to Treasury and did not refund all wage garnishments and Treasury offsets collected. In addition, FSA did not develop procedures to obtain and track the U.S. Department of Justice’s progress on suspending and refunding involuntarily collections on defaulted Department-held loans.
We made one recommendation that FSA determine appropriate actions to take regarding employers that continued to improperly withhold wages from borrowers, adopt best practices for proactively identifying payments eligible for refund, and develop and implement procedures to obtain and track Justice’s progress on suspending and refunding payments involuntarily collected during the suspension period on Department-held loans.
Implementing Pandemic Relief Aid Laws
See our Pandemic Relief page.