In order to provide relief to student loan borrowers during the COVID-19 national emergency, the new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides the suspension of principal and interest payments of federal student loans, from March 13, 2020 through September 30, 2020. Consequently, student loans garnishment orders will temporarily be suspended for qualifying student loans.
Employers garnishing wages due to student loan wage garnishment orders will be notified by the company that services the loan if the garnishment qualifies for a temporary postponement. If you are not sure if you should stop the student loan wage garnishment of an employee, the garnishment should continue to be processed in payroll until you receive the notification from the servicing company telling you to suspend payment. Any qualifying garnishment that is paid between March 13, 2020 and September 30, 2020 will be refunded after the borrower requests a refund. Borrowers must contact their student loan servicer to receive the refund.
Loans owned by commercial lenders, and some Perkins Loans owned by the institution the borrower attended, are not eligible for this benefit at this time. Also excluded from this relief are private (non-federal) student loans owned by banks, credit unions, or other private entities. However, there may be other options available that borrowers can discuss with their servicer.