Student Loan Deferrals under COVID-19

In light of the government's recent suspension of student loan principle and interest payments, this article will discuss how to identify and update the Namely Payroll profiles of affected employees.

Effective March 13, 2020, the U.S. Department of Education has issued a suspension on principal and interest payments of federal student loans (including those collected via garnishment) in response to the COVID-19 outbreak. Additionally, the federal student loan interest rate has been reduced to 0% for the duration of this period. This suspension will end on September 30, 2021 (an extension to the original January 31, 2021 date).  

TIP:

During this extension, collections on defaulted and federally held loans will remain halted. Any borrower with these loans whose employer continues to garnish their wages will receive a refund of those garnishments.

While you may suspend any federally-held student loan garnishment immediately, the Department of Education will also send you a letter confirming that a particular employee's garnishment may be suspended.  Please refer to this notice if you are unsure if a garnishment is on a qualifying loan.  (This notice is to be sent within 15 days of the CARES Act’s March 27, 2020, enactment.)

If you would like to see which employees currently have garnishments in Namely Payroll:

  1. Go to Reports > Date Range in Payroll.

  2. Click Employee Deduction.

  3. Filter the Employee Deduction report by the deduction type Garnishment to view your employees’ garnishment configuration.

  4. Confirm any employees whose wages are being garnished for student loan payments.

Please note, not all garnishment deduction types in Namely Payroll are federal student loans. Please refer to any documentation sent to your organization to confirm the purpose of each active garnishment.

To temporarily prevent a federal student loan deduction from coming out of any applicable employee’s paycheck, you will need to end date that deduction for the time being: 

  1. Go to Employee > Deduction in Namely Payroll.

  2. Click Edit next to that employee’s garnishment deduction. 

  3. Under the Edit Record section, enter the desired End Date.

  4. Click Save.

When the relief period has passed, you will be able to remove the end date and resume the garnishment deduction.



Notes:

  • Perkins loans held by an educational institution and commercially-held Federal Family Education loans do not qualify for suspended payments. Non-federal student loans owned by private entities, banks, credit unions, and schools also do not qualify.