01 April 2020

CARES Act Suspends Withholding Obligations for Employers on Some Defaulted Federal Student Loans

***Information and guidance in client updates was up to date at time of publication. During the pandemic, information and guidance has been changing rapidly. If you have any questions about the information contained in a client update, please contact the author(s) or your Miller Johnson attorney.***

Section 4513 of the CARES Act suspends collection activities on defaulted federal student loans under the Higher Education Act (HEA) until September 30, 2020. The suspension applies to current HEA garnishments or withholding orders. As a result of the suspension, employers should discontinue further withholding from the wages of an employee currently subject to a HEA student loan garnishment or withholding order. The suspension is retroactive to March 13, 2020.
The suspension of federal student loan collections does not apply to other forms of garnishment or withholding. Employers should continue to process and withhold under all other orders of garnishment or withholding as required by law.

If you have any questions about these changes to an employer’s withholding obligations for a federal student loan garnishment, please contact your Miller Johnson attorney.