Devos sued over seizure of student tax refunds amid pandemic

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Education Secretary Betsy DeVos was accused in a lawsuit of illegally seizing millions of dollars in tax refunds from students who defaulted on federal loans despite a congressional ban on such collections during the pandemic.

The groups Student Defense and Democracy Forward filed the proposed class-action suit, which also named Treasury Secretary Steven Mnuchin, Friday in Washington, saying the collections are part of the the Trump administration’s “botched” roll-out of the $2 trillion coronavirus relief bill.

The legislation suspended wage garnishments and other involuntary collections on federal student loans until Sept. 30 “to help families weather the economic fallout of the coronavirus pandemic,” the groups said in a statement. The ban includes a Treasury program that garnishes tax refunds, they said.

One of the plaintiffs, Kori Cole, a graduate of Heritage College in Lakeside, Colorado, said she received a Treasury notice in April saying her and her husband’s entire $7,000 federal tax refund was seized. She currently owes $23,000 on loans she took out for an X-ray technician and medical assistant course, according to the complaint. Her husband’s woodworking business, their only source of income, was shuttered during the pandemic.

The lawsuit seeks a court order halting the practice and a return of the allegedly seized checks.

Messages sent the Education Department and Treasury weren’t immediately returned.

Bloomberg News
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