Watchdog Group Mostly Commends FSA’s Implementation of Student Loan Suspension

By Hugh T. Ferguson, NASFAA Staff Reporter 

The Department of Education’s (ED) Office of Inspector General (OIG) recently conducted a review of how Federal Student Aid (FSA) implemented the suspension of involuntary collection of federally held student loans in response to the pandemic, concluding that the agency was mostly successful in carrying out the benefit.

The payment suspension was first implemented at the outset of the coronavirus outbreak as a part of executive action and the Coronavirus Aid, Relief & Economic Security (CARES) Act, with OIG determining that FSA acted swiftly in administering their aid.

“FSA took quick action to implement processes that generally achieved positive results in suspending and refunding most involuntary collections on defaulted Department-held loans,” OIG found in their recent audit. “Specifically, we found that FSA suspended administrative wage garnishments and the U.S. Department of Treasury (Treasury) offsets for over 96 percent of the borrowers that FSA collected payments for within 90 days of March 13, 2020, the start of the suspension period.”

While the report broadly approved of the agency’s actions, OIG urged FSA to address the administrative wage garnishments (AWG) of 1,930 borrowers still being collected as of October 23, 2020.

FSA committed to further analyze those garnishments.

“In order to determine if any employers continue to send wage withholdings in violation of the CARES Act, and in violation of FSA’s written orders to suspend garnishment, FSA will temporarily re-open the AWG ‘lockbox’ for a period of six weeks,” Robin Minor wrote in response to OIG’s audit. “This six-week period should allow for sufficient time to cycle through the various pay schedules that borrowers experience. Any AWG payments that are received from employers during this period will be analyzed, FSA will forward a final list of non-compliant employers to the Inspector General for additional action.”

In their concluding remarks OIG urged FSA to adopt best practices for proactively identifying payments eligible for refund, and develop and implement procedures to obtain and track the Department of Justice’s (DOJ) progress on suspending and refunding payments involuntarily collected during the suspension period on Department-held loans.

FSA argued that they do not have the authority to track collection activity performed by DOJ.

The audit follows a recent data report from FSA that found no borrowers with Direct Loans (DL) entered default during the previous quarter. However the student loan moratorium slated to expire at the end of September has garnered significant discussion.

ED has not yet indicated how it will approach the end of the benefit but Education Secretary Miguel Cardona has said the issue is a high priority for the department.

“We are aiming to provide as much of an onramp for these borrowers as possible, and restarting payments in October is something that we ... are continuing conversations about if that’s the best time,” Cardona said in recent remarks.

Stay tuned to Today’s News for more details on the student loan moratorium.


Publication Date: 6/21/2021

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