The U.S. Department of Education (DOE) issued a press release extending the federal student loan relief until Jan. 31, 2022. According to the announcement, this will be the final extension setting a “definitive end date” for the relief. The extension is welcomed by students and parents alike, as the relief was set to expire on Sept. 30, 2021, and creates more immediate financial freedom during the ongoing pandemic. However, employers should be wary of the extension’s effect on student loan wage garnishments.

The extension is accompanied by a continued pause in the collection, interest and repayment of any defaulted and federally held loans. Therefore, employers should resume not collecting wage garnishments related to federal student loans until the DOE indicates payments should be restarted. Any borrowers with defaulted, federally held loans whose employer continues to garnish their wages will receive a full refund of the garnishments. As the end of the extension approaches, the DOE will release further information about restarting payments.

Efficiently Manage Wage Garnishments

As an employer, you manage more than just wage garnishments from defaulted student loans. Avoid the penalties of improperly handling other types of garnishments with DM Payroll Solutions’ wage garnishment management tool. Easily prioritize other garnishments to be addressed and paid out, as well as pause your employees’ student loan garnishments until the extension ends. For more information on how our wage garnishment solutions can streamline your process, contact us today.