Student Loan Borrowers File New Class Action Lawsuit Over Illegally Seized Tax Refunds – Forbes
The CARES Act suspended all collections on defaulted federally-held student loans from March 13, 2020 until September 30, 2020. The Act mandates that involuntary collections efforts by the U.S. Department of Education and U.S. Department of Treasury — including wage garnishments, Social Security offsets, and seizure of federal tax refunds against borrowers in default on their federal student loans — are to be suspended.
The Department of Education did not fully comply with the CARES Act suspension of wage garnishments, leading to 54,000 student loan borrowers continuing to get garnished weeks after the CARES Act went into effect. They filed suit.
Then, federal student loan servicers started dinging borrowers’ credit reports due to the automatic CARES Act suspension of payments. They filed suit.
Now, student loan borrowers have filed a new lawsuit against Education Secretary Betsy DeVos, and Treasury Secretary Steven Mnuchin, alleging that the government continues to also illegally intercept federal tax refunds in direct violation of the CARES Act.