The Department of Education announced today that it would defer collection actions on defaulted student loans for at least 60 days as part of the federal government’s overall response to the coronavirus (“COVID-19”) pandemic.

The most significant action mentioned in the announcement is a temporary halt to “Treasury offsets.” This powerful tool allows the Department of the Treasury to garnish Social Security benefits, federal income tax refunds, and other federal payments to recoup from defaulted borrowers. Secretary of Education Betsy DeVos ordered the DOE to stop all requests to the Department of the Treasury for garnishment, and also directed the DOE to refund over $1.8 billion in offsets already collected from more than 830,000 borrowers. Those refunds represent offsets that were in process on March 13, the date President Trump announced the national emergency over COVID-19.

In addition to stopping new offsets and refunding those in progress, the DOE also directed private collection agencies to halt all collection actions, including making phone calls, issuing collection letters, and sending billing statements.

These actions come on the heels of an announcement by President Trump that all federally held student loans will have their interest rates set to zero for a period of at least 60 days, and non-defaulted borrowers will have the option to suspend their payments for the same period of time. For additional details on the President’s announcement, see this blog post.