The Coronavirus Aid, Relief, and Economic Security (CARES) Act offers individuals temporary, short-term relief from their student debt obligations. That’s welcome news for any employees currently in the process of repaying their loans from school.
For employers, though, this provision opens up several key questions: What are the specifics of this particular relief initiative? And how does it impact wage garnishments for employees with defaulted student loans?
What employers should know about the student loan provision
Under provisions established in the CARES Act, borrowers are excused from making payments on their federal student loans from March 13 through Aug. 31, 2022, an end date that has been extended multiple times already. Under these same provisions, borrowers will also receive 0% interest until Aug. 31, 2022, on qualifying loans. These repayment relief measures only apply to federal loans. However, private lenders are encouraged to follow suit.
Of particular interest to employers, the provision may also stop garnishments of wages, Social Security and tax refunds for borrowers with defaulted student loans. As a result, it’s up to employers to explore whether they need to halt wage garnishments for qualifying employees.
Employers should have received notifications from the company that’s serving the loan on behalf of the Education Department. If an employer is still waiting on notification, they or the employee may want to contact the lender to kickstart the notification process.
Lastly, qualified amounts already deducted from employees paychecks, will be returned directly to the employee — not the employer — from the Department of Education. Employers may want to inform impacted employees of this process.
How to stop garnishments in Workforce Ready
If you’re a B2E Solutions client and have determined that you need to stop garnishments, it’s a quick and painless process. Simply log in to Workforce Ready and end date the current garnishment for impacted employees. If you have questions, don't hesitate to reach out to your client success manager (CSM) for help.