A Monday court filing from the U.S. Education Department says the agency was still garnishing wages from more than 50,000 workers who had fallen behind on their student loans more than a month after Congress ordered an immediate suspension of the practice during the coronavirus pandemic.
The finding, which included the number of garnishments as of last week, was part of a court-ordered update jointly filed by the Education Department and by a home health aide leading a class action lawsuit against the agency. The aide, Elizabeth Barber, says the department has illegally docked her pay multiple times since Congress approved a March 27 rescue package ordering a pause on involuntary collections.
In the filing, the department says it’s “continuing to endeavor to halt all wage garnishments.” It says that, as of May 7, about 54,000 workers were being subject to wage garnishment. On March 13, that figure was approximately 390,000, according to the filing.
The Education Department did not immediately respond to a request for comment. It previously said it was contacting employers by phone, email and letters instructing them to stop docking pay.
Barber filed the suit with support from consumer and student advocacy groups, including Student Defense, a Washington nonprofit. The group said Monday’s filing proves that borrowers are having their wages illegally seized six weeks after Congress’ package took effect.
“For borrowers already worried about affording rent, groceries, and medication, losing part of each paycheck to an unlawful garnishment is enough to push them into truly dire circumstances,” said Alex Elson, senior counsel at Student Defense.
The filing says the department will issue periodic reports on the issue while the case continues.
The lawsuit, filed April 30 in federal court, alleged that thousands of workers were getting up to 15% of their paychecks held back because the Education Department had failed to notify employers that they must stop withholding pay.
The complaint cited department estimates saying 285,000 people had their wages garnished between March 13 and March 26.
Federal law authorizes the Education Department to garnish up to 15% of workers’ paychecks without a court order if they go into default on federal student loan payments. The agency can issue garnishment orders to employers and contracts with private agencies to enforce collection. Last year, the department garnished $842 million from workers, according to federal data.
Education Secretary Betsy DeVos previously told federal student loan borrowers that garnishments would be halted through Sept. 30, with no action needed on their part. On March 25, DeVos said collections were being paused and workers would be refunded for any wage garnishments taken since March 13.
But Democrats and student advocates say the department has been slow to enact the change.
A group of 42 Democrats in Congress raised concern over the issue in an April 16 letter to DeVos and Treasury Secretary Steven Mnuchin. The letter said borrowers were reporting that employers and collection agencies had failed to implement the suspension weeks after it had been ordered.
Congress ordered the Education Department to pause wage garnishments amid other measures meant to relieve financial pressure on student loan borrowers.
The lawsuit asks the court to order that DeVos halt wage garnishment immediately and notify borrowers when it has actually been stopped. It also demands immediate refunds for any pay that has been withheld since March 13, the day President Donald Trump declared a national emergency.
Trump Signs PPP Loan Extension, Labor Sec. Says ‘No’ To More Unemployment Benefits
Small business owners now have until August 8 to apply for a loan through the Paycheck Protection Program (PPP). This is thanks to a bill signed by President Trump on Saturday.
The deadline to apply was June 30. However, more than $134 billion in funding still available according to the Small Business Administration. With this, President Trump extended the deadline so more businesses could benefit from the program.
The bill signed by President Trump also separated the authorized limits for loan commitments from other lending programs offered by the Small Business Administration.
According to the SBA, the PPP had awarded more than 4.7 million forgivable loans for more than $518 billion as of June 27.
Officials in the Trump administration said on Thursday that they will begin releasing information on the companies that have received more than $150,000 from the program. This is in an effort to address complaints about large, well-funded companies. These large companies receive PPP loans while many small or independently-owned businesses struggled to receive funding.
According to the US Treasury, approximately 5,300 borrowers have received almost 2.5 million loans worth $228 billion. That is roughly 44 percent of total PPP spending.
The SBA made an effort to address another complaint by small businesses. It has lowered the percentage of the loan balance that must be used to keep employees on the payroll. Previously, if more than 25% of the loan balance was used for purposes other than keeping employees on the payroll, the loan would have to be repaid. That threshold has been reduced to 60% of the loan balance used on employee salaries to make the loan forgivable.
The Program’s Significance
President Trump credits the Paycheck Protection Program with keeping an estimated 50 million Americans employed when they would otherwise have lost their jobs, preventing the unemployment rate from worsening as the country faced an economic shutdown.
The extension of the Paycheck Protection Program had unanimous bipartisan support. However, the July 31 deadline to extend the enhanced unemployment benefits will be hotly contested.
The latest high-ranking cabinet member to come out against extending the benefits is Labor Secretary Eugene Scalia.
During an interview on Fox News Sunday, Scalia said PPP loans serve as an “essential” part of the recovery. However, he doesn’t believe that $600-a-week enhanced unemployment benefits are needed beyond their July 31.
“It was a really important thing to do as we were shutting our economy down. Americans across the country were basically being told, and we needed to take measures, but they were basically being told, you can’t go to work right now and so we needed that substantial unemployment benefit. There are some states where you can get on an annual basis $75,000 a year right now on unemployment. As we reopen the economy, I don’t think we need a benefit like that.” he said.
Scalia added, “During the so-called Great Recession 10, 12 years ago when we had a downturn, The added federal unemployment benefit was $25 a week. What we did in the CARES Act was $600 a week.”
SBA Rule: Business Loan Program Temporary Changes
WASHINGTON, June 20 — The Small Business Administration has issued a rule (13 CFR 120), published in the Federal Register on June 18, entitled: “Business Loan Program Temporary Changes; Paycheck Protection Program-Additional Revisions to First Interim Final Rule”.
The rule was issued by Administrator Jovita Carranza.
Effective date: The provisions in this interim final rule are effective June 16, 2020.
Comment date: Comments must be received on or before July 20, 2020.
FOR FURTHER INFORMATION CONTACT: A Call Center Representative at 833-572-0502, or the local SBA Field Office; the list of offices can be found at https://www.sba.gov/tools/local-assistance/districtoffices.
* * *
On April 2, 2020, the U.S. Small Business Administration (SBA) posted on its website an interim final rule relating to the implementation of sections 1102 and 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act) (published in the Federal Register on April 15, 2020).
Section 1102 of the Act temporarily adds a new product, titled the “Paycheck Protection Program,” to the U.S. Small Business Administration’s (SBA’s) 7(a) Loan Program.
Subsequently, SBA issued a number of interim final rules implementing the Paycheck Protection Program.
This interim final rule revises SBA’s interim final rule published in the Federal Register on April 15, 2020 by changing the eligibility requirement related to felony convictions of applicants or owners of the applicant.
I. Background Information
On March 13, 2020, President Trump declared the ongoing Coronavirus Disease 2019 (COVID-19) pandemic of sufficient severity and magnitude to warrant an emergency declaration for all states, territories, and the District of Columbia. With the COVID-19 emergency, many small businesses nationwide are experiencing economic hardship as a direct result of the Federal, State, and local public health measures that are being taken to minimize the public’s exposure to the virus. These measures, some of which are government-mandated, have been implemented nationwide and include the closures of restaurants, bars, and gyms. In addition, based on the advice of public health officials, other measures, such as keeping a safe distance from others or even stay-at-home orders, have been implemented, resulting in a dramatic decrease in economic activity as the public avoids malls, retail stores, and other businesses.
On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act or the Act) (Pub. L. 116-136) to provide emergency assistance and health care response for individuals, families, and businesses affected by the coronavirus pandemic. The Small Business Administration (SBA) received funding and authority through the Act to modify existing loan programs and establish a new loan program to assist small businesses nationwide adversely impacted by the COVID-19 emergency.
Section 1102 of the Act temporarily permits SBA to guarantee 100 percent of 7(a) loans under a new program titled the “Paycheck Protection Program.” Section 1106 of the Act provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the Paycheck Protection Program.
On April 24, 2020, the President signed the Paycheck Protection Program and Health Care Enhancement Act (Pub. L. 116-139), which provided additional funding and authority for the PPP. On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) (Pub. L. 116-142).
II. Comments and Immediate Effective Date
This interim final rule is effective without advance notice and public comment because section 1114 of the CARES Act authorizes SBA to issue regulations to implement Title I of the Act without regard to notice requirements. In addition, SBA has determined that there is good cause for dispensing with advance public notice and comment on the grounds that that it would be contrary to the public interest. Specifically, advance public notice and comment would defeat the purpose of this interim final rule given that SBA’s authority to guarantee PPP loans expires on June 30, 2020. These same reasons provide good cause for SBA to dispense with the 30-day delayed effective date provided in the Administrative Procedure Act. Although this interim final rule is effective on or before date of filing, comments are solicited from interested members of the public on all aspects of the interim final rule, including section III below. These comments must be submitted on or before July 20. 2020. The SBA will consider these comments, comments received on the interim final rule posted on SBA’s website April 2, 2020 (the First Interim Final Rule) and published in the Federal Register on April 15, 2020, and the need for making any revisions as a result of these comments.
III. Paycheck Protection Program–Additional Revisions to First Interim Final Rule (85 FR 20811)
The CARES Act was enacted to provide immediate assistance to individuals, families, and businesses affected by the COVID-19 emergency. Among the provisions contained in the CARES Act are provisions authorizing SBA to temporarily guarantee loans under a new 7(a) loan program titled the “Paycheck Protection Program.” Loans guaranteed under the Paycheck Protection Program (PPP) will be 100 percent guaranteed by SBA, and the full principal amount of the loans may qualify for loan forgiveness. The purpose of this interim final rule is to make changes to the First Interim Final Rule, posted on SBA’s website on April 2, 2020, and published in the Federal Register on April 15, 2020 (85 FR 20811). The First Interim Final Rule, as amended, should be interpreted consistent with the frequently asked questions (FAQs) regarding the PPP that are posted on SBA’s website and the other interim final rules issued regarding the PPP.
1. Changes to the First Interim Final Rule
The First Interim Final Rule provided, among other things, that a PPP loan will not be approved if an owner of 20 percent or more of the equity of the applicant has been convicted of a felony within the last five years. After further consideration, the Administrator, in consultation with the Secretary of the Treasury (the Secretary), has determined that a shorter timeframe for felonies that do not involve fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance is more consistent with Congressional intent to provide relief to small businesses and also promotes the important policies underlying the First Step Act of 2018 (Pub. L. 115-391). Therefore, Part III.2.b.iii. of the First Interim Final Rule (85 FR 20811, 20812) is revised to read as follows:
b. Could I be ineligible even if I meet the eligibility requirements in (a) above?
You are ineligible for a PPP loan if, for example:
* * * * *
iii. An owner of 20 percent or more of the equity of the applicant is incarcerated, on probation, on parole; presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of a felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance within the last five years or any other felony within the last year; or
* * * * *
2. Additional Information
SBA may provide further guidance, if needed, through SBA notices which will be posted on SBA’s website at www.sba.gov. Questions on the Paycheck Protection Program may be directed to the Lender Relations Specialist in the local SBA Field Office. The local SBA Field Office may be found at https://www.sba.gov/tools/local-assistance/districtoffices.
Compliance With Executive Orders 12866, 12988, 13132, 13563, and 13771, the Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory Flexibility Act (5 U.S.C. 601-612)
Executive Orders 12866, 13563, and 13771
This interim final rule is economically significant for the purposes of Executive Orders 12866 and 13563, and is considered a major rule under the Congressional Review Act. SBA, however, is proceeding under the emergency provision at Executive Order 12866 Section 6(a)(3)(D) based on the need to move expeditiously to mitigate the current economic conditions arising from the COVID-19 emergency. This rule’s designation under Executive Order 13771 will be informed by public comment.
This rule is necessary to implement Sections 1102 and 1106 of the CARES Act and the Flexibility Act in order to provide economic relief to small businesses nationwide adversely impacted under the COVID-19 Emergency Declaration. We anticipate that this rule will result in substantial benefits to small businesses, their employees, and the communities they serve. However, we lack data to estimate the effects of this rule.
Executive Order 12988
SBA has drafted this rule, to the extent practicable, in accordance with the standards set forth in section 3(a) and 3(b)(2) of Executive Order 12988, to minimize litigation, eliminate ambiguity, and reduce burden. The rule has no preemptive effect but does have a limited retroactive effect consistent with section 3(d) of the Flexibility Act.
Executive Order 13132
SBA has determined that this rule will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various layers of government. Therefore, SBA has determined that this rule has no federalism implications warranting preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C. Chapter 35
SBA has determined that this rule will require modification to the existing PPP information collection that is approved under OMB Control Number 3245-0407 as an emergency request until October 31, 2020. As discussed above, this rule amends the PPP eligibility requirements regarding certain felony charges. As a result of these amendments, conforming changes will be made to Question 6 of Form 2483, Borrower Application Form, and Section H of Form 2484, Lender Application Form. SBA will submit the revisions to these forms to the Office of Management and Budget for approval.
Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act (RFA) generally requires that when an agency issues a proposed rule, or a final rule pursuant to section 553(b) of the APA or another law, the agency must prepare a regulatory flexibility analysis that meets the requirements of the RFA and publish such analysis in the Federal Register. 5 U.S.C. 603, 604. Specifically, the RFA normally requires agencies to describe the impact of a rulemaking on small entities by providing a regulatory impact analysis. Such analysis must address the consideration of regulatory options that would lessen the economic effect of the rule on small entities. The RFA defines a “small entity” as (1) a proprietary firm meeting the size standards of the Small Business Administration (SBA); (2) a nonprofit organization that is not dominant in its field; or (3) a small government jurisdiction with a population of less than 50,000. 5 U.S.C. 601(3)-(6). Except for such small government jurisdictions, neither State nor local governments are “small entities.” Similarly, for purposes of the RFA, individual persons are not small entities.
The requirement to conduct a regulatory impact analysis does not apply if the head of the agency “certifies that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” 5 U.S.C. 605(b). The agency must, however, publish the certification in the Federal Register at the time of publication of the rule, “along with a statement providing the factual basis for such certification.” If the agency head has not waived the requirements for a regulatory flexibility analysis in accordance with the RFA’s waiver provision, and no other RFA exception applies, the agency must prepare the regulatory flexibility analysis and publish it in the Federal Register at the time of promulgation or, if the rule is promulgated in response to an emergency that makes timely compliance impracticable, within 180 days of publication of the final rule. 5 U.S.C. 604(a), 608(b).
Rules that are exempt from notice and comment are also exempt from the RFA requirements, including conducting a regulatory flexibility analysis, when among other things the agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. Small Business Administration’s Office of Advocacy guide: How to Comply with the Regulatory Flexibility Act, Ch.1. p.9. Accordingly, SBA is not required to conduct a regulatory flexibility analysis.
Authority: 15 U.S.C. 636(a)(36); Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136, Section 1114.
[FR Doc. 2020-13130 Filed 6-16-20; 2:00 pm]
BILLING CODE 8026-03-P
The document is published in the Federal Register: https://www.federalregister.gov/documents/2020/06/18/2020-13130/business-loan-program-temporary-changes-paycheck-protection-program-additional-revisions-to-first
TARGETED NEWS SERVICE (founded 2004) features non-partisan ‘edited journalism’ news briefs and information for news organizations, public policy groups and individuals; as well as ‘gathered’ public policy information, including news releases, reports, speeches. For more information contact MYRON STRUCK, editor, [email protected], Springfield, Virginia; 703/304-1897; https://targetednews.com
Trump Says SBA Has Saved 50 Million Jobs, Issued $4.6 Billion in Loans
U.S. President Donald Trump attended a roundtable with small business leaders yesterday. There, he reported that the Small Business Administration had processed over 4.6 million loans to small businesses. He also said that this saved an estimated 50 million American jobs.
“Small business is no longer small business, it’s big business,” he said. Then, the president expressed sympathy for the 41% of black-owned businesses and 22% of all small businesses that were forced to close this year due to the coronavirus pandemic.
In discussing the Payroll Protection Program, Trump said he approved over $670 billion for PPP loans. He also mentioned that said he is working with Democrats about doing “something further.”
A Meeting With Small Business Owners
In attendance for the meeting were several small business owners who received PPP loans. According to Trump, “their businesses are on the road to recovery and they’re doing really well. We have a lot of businesses that are doing really well.”
He said “very smart Wall Streeters” originally doubted him after saying the country would experience a “v-shaped” recovery. However, the President said that they all agree with him now. This comes as the country’s economic recovery continues to do even better than expected.
“We are talking about a v-shape, we’re almost an i-shape. “I” is straight up and down, I talked about a v-shape and a lot of people disagreed with me, not everybody, but a lot of very smart Wall Streeters were disagreeing, now they are pretty much coming on board, saying it looks like it could be a “v.” So a “v” is the thing we were shooting for and it looks like that’s what we got,” according to Trump.
The President added that small businesses across the nation are now safely reopening. Trump also mentioned that the economic and jobs numbers that were just reported are setting the country up for tremendous growth.
“Last month we added a record 2.5 million jobs, it’s the highest in the history of our country in one month. That’s the highest number of jobs, 2.5 million. The Dow rose about 26,000 points and we saw the largest surge in retail sales ever recorded. Next year is shaping up to be one of the greatest years in the history of our country from an economic standpoint, I truly believe that. I think we’re going to have a great 3rd quarter, we’re going to have a great 4th quarter, and next years going to be a phenomenal year.”
The President’s Confidence
The economic growth that blossomed under his presidency was paused due to the pandemic. However, he confidently added that it’s almost a given that if we did it once, we can do it again.
“After I was elected President our country added more than 7 million jobs, 12,000 factories and trillions of dollars of wealth. We created nearly 9,000 opportunity zones, and African-American, Asian-American and Hispanic-American unemployment and poverty reached all-time lows. We had the greatest employment numbers we ever had and we had to turn it off,” the president said. He also added that “We saved millions of people by doing it, we did the right thing, and now we’re turning it back on and the numbers are going up much much faster than anybody would have thought. It’s a great honor to see it. We built the strongest economy the world has ever seen before the virus and together we are doing it again.”
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