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    What is Student Loan Wage Garnishment?

    Kayla Korzekwinski By Kayla Korzekwinski
    Kayla Korzekwinski

    Kayla Korzekwinski is a Scholarships360 content writer. She earned her BA from the University of North Carolina at Chapel Hill, where she studied Advertising/PR, Rhetorical Communication, and Anthropology. Kayla has worked on communications for non-profits and student organizations. She loves to write and come up with new ways to express ideas.

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    Edited by Maria Geiger
    Maria Geiger

    Maria Geiger is Director of Content at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania.

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    Updated: April 10th, 2024
    Female student standing outside of her work building looking at the student loan wage garnishment amount on her phone.

    If you fall too far behind on your federal student loan payments, the Department of Education can garnish your wages from each paycheck. Student loan wage garnishment can have a huge impact on your finances, especially if you’re on a tight budget. Continue reading to learn more about student loan wage garnishment!

    Also read: All about income-driven repayment plans

    About wage garnishment

    Wage garnishment is a form of collections that is used by student loan lenders. It occurs when federal student loans go into default. The Department of Education can take up to 15% of disposable pay from your paychecks for the defaulted loan. Disposable pay is what remains of your paycheck after deductions such as taxes. Wage garnishment continues until the debt is repaid or the default is resolved.

    Federal student loans go into default after 9 months of missed payments. When federal loans default, you will receive an offer to make arrangements to rehabilitate the loans. If you do not make arrangements to remedy the default, a wage garnishment notice will be sent. Wage garnishment begins 30 days after the notice is sent if arrangements are not made to prevent it.

    See also: Student loan default: What it is and how to avoid it

    What can you do to avoid wage garnishment?

    If you are at risk of incurring wage garnishment, it’s important to act quickly to rectify the situation. There are a few ways you can go about doing this. Many federal loans allow for income-driven repayment plans, which can reduce your monthly payments to as low as $0. You might also be able to defer your loans, especially if you are in grad school.

    If you are not in immediate risk of wage garnishment, but see it as a potential risk, make sure to have a good sit-down with your finances and figure out how to avoid it. Whether it is sticking to a firm budget, cutting some expenses, or working extra hours for a set period of time, it’s worth it. This will help you to avoid losing additional money and hurting your credit score.

    Your rights in wage garnishment

    It’s important to know your rights in wage garnishment, especially because the order may be lifted if one of your rights is violated. 

    Remember, borrowers have the right to:

    • Be sent a notice that the Department of Education intends to garnish their wages in 30 days.
    • Inspect records relating to their debt.
    • Avoid wage garnishment by making voluntary payments under an agreement with the Department of Education.
    • File for and be given a hearing.
    • Have the garnishment suspended until a ruling is made by filing for a hearing in a timely manner.
    • Not be discharged from employment, refused employment, or subject to disciplinary action due to the wage garnishment.
    • Take legal action against an employer if they discharge, refuse to hire, or take disciplinary action due to the garnishment.
    • Not have any information about the wage garnishment shared with an employer other than what is necessary to comply with the garnishment order.

    Additionally, borrowers whose wages are being garnished will always be allowed to keep an amount equal to 30 times the national minimum wage. The national minimum wage is $7.25. 30 x 7.25 = 217.50. Therefore, $217.50 is protected from each paycheck.

    Learn more: How to get out of student loan default

    How to stop wage garnishment

    Wage garnishment can be stopped before it starts. Once garnishment begins, however, it’s more difficult to stop. The first way to stop or prevent wage garnishment is to negotiate repayment terms that are acceptable to the Department of Education. The first payment must be made within 30 days of when the garnishment notice was sent

    Wage garnishment can also be stopped if you were involuntarily fired from your job. Garnishment will be suspended for the first 12 months of your new job.

    Also read: How to qualify for student loan bankruptcy

    Wage garnishment hearings

    Another way to stop wage garnishment is by filing for a hearing. With a hearing, you can object to the wage garnishment by showing that either the loans are not actually yours or the garnishment would cause extreme financial hardship. 

    A hearing may sound intimidating, but it just involves presenting documents to show your case. Hearings can even be done over the phone or be based only on the records you provide. To file for a hearing, you must make a request in writing and send it to the Department of Education.

    If the request is sent within the 30 days of receiving notice, the wage garnishment will be suspended until a decision is made. You can file for a hearing at any time, but the garnishment will not be suspended if the request isn’t made in that timeframe.

    Once a request is sent, the lender will arrange the hearing. Typically, a decision will be made in 60 days. The outcome of a hearing may be either stopping wage garnishment, reducing wage garnishment, or no change.

    Take action early! 

    The best way to avoid wage garnishment because of student loans is to take action before it happens. If your loans are in default, make arrangements to remedy the debt. If you fear you may go into default, consider changing your repayment plan. The goal is to avoid wage garnishment as best you can!

    Don’t miss: How to spot student loan forgiveness scams

    Key Takeaways

    Key Takeaways

    • The Department of Education can take money from each of your paychecks if you fall too far behind on federal student loan payments
    • You might be able to avoid garnishment by switching your repayment plan or deferring your loans
    • Wage garnishment can hurt your credit score and make it difficult to have a healthy financial future
    • Students can request a wage garnishment hearing to attempt to reverse the decision

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