Federal Student Aid’s Suspension of Involuntary Collection in Response to the Coronavirus Pandemic

The objective of our review was to evaluate the results of Federal Student Aid’s (FSA) process for suspending involuntary collection and refunding payments involuntarily collected on defaulted Department-held loans in response to the Coronavirus pandemic. 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. However, as of October 23, 2020, we found that FSA continued to receive administrative wage garnishments for 1,930 borrowers. We also found that FSA refunded most administrative wage garnishments and Treasury offsets collected from March 13, 2020, through September 30, 2020, and issued refunds for $576.65 million (99 percent) of the $582.48 million collected for the same period. FSA also refunded 1,063,984 of the 1,094,507 administrative wage garnishments and 221,436 of the 244,080 Treasury offsets within 60 days from the date the payments were received. However, we found that FSA did not reprocess refunds for $21.25 million of the $576.65 million FSA refunded that were subsequently returned to Treasury and did not refund $5.83 million (1 percent) of the $582.48 million wage garnishments and Treasury offsets collected. Finally, we found that FSA did not develop procedures to obtain and track the U.S. Department of Justice’s (Justice) progress on suspending involuntary collections and refunding payments involuntarily collected on defaulted Department-held loans from March 13, 2020, through September 30, 2020.