{"id":359808,"date":"2021-07-06T14:37:26","date_gmt":"2021-07-06T20:37:26","guid":{"rendered":"https:\/\/www.creditrepair.com\/blog\/?p=359808"},"modified":"2022-09-22T15:35:12","modified_gmt":"2022-09-22T21:35:12","slug":"student-loan-wage-garnishment","status":"publish","type":"post","link":"https:\/\/www.creditrepair.com\/blog\/finance\/student-loan-wage-garnishment\/","title":{"rendered":"Student loan wage garnishment"},"content":{"rendered":"\n
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Disclosure regarding our editorial content standards.<\/a><\/p>\n\n\n\n

Wage garnishment<\/a> is when a court orders an employer to keep a specific portion of someone\u2019s paycheck to transfer to a lender or another person. This action is usually taken because an individual stopped paying their debts. The most common types of wage garnishments are for child support, consumer debts and student loans. <\/p>\n\n\n\n

Student loan wage garnishment occurs when an individual\u2019s federal or private student loan goes into default. It\u2019s estimated that 1 in 10 Americans<\/a> has defaulted on a student loan and is at risk for or already has student loan wage garnishment.  <\/p>\n\n\n\n

How does student loan wage garnishment work?<\/h2>\n\n\n\n

Student loan wage garnishment can happen when you let your student loans go into default. The government doesn\u2019t need to take legal action against consumers to enact student loan wage garnishment on federal student loans. This process is known as administrative wage garnishment. <\/p>\n\n\n\n

On the other hand, private lenders typically need to take you to court and win a judgment against you. Going to court costs your lender money, and the whole process can take several weeks or months. <\/p>\n\n\n\n

Note that if your parents cosigned your student loan, they can have their wages garnished too. <\/p>\n\n\n\n

Student loan wage garnishment doesn\u2019t happen overnight. For federal loans, you have to miss nine months of payments, ignore communications about defaulted loans and ignore a notice of wage garnishment. <\/p>\n\n\n\n

If all this occurs, your lender will notify your employer to withhold up to 15 percent of your paycheck (after taxes and deductions). Your employer legally has to abide by this request. <\/p>\n\n\n\n

The student loan wage garnishments will stop when:<\/p>\n\n\n\n

  • Your loans are paid off<\/li>
  • You\u2019re no longer in default<\/li>
  • You\u2019ve made other arrangements with the lender<\/li><\/ul>\n\n\n\n

    Private lenders may have different definitions for when your loan is officially in default. However, regardless of whether your loans are with a private or federal lender, you should receive a letter notifying you of the student loan wage garnishment at least 30 days before the first action occurs. This is known as a notice of intent. <\/p>\n\n\n\n

    Legally, the letter has to mention that you can take the lender to court and challenge the repayment plan. If you plan to go to court, you\u2019ll have to take action within 30 days of receiving the notice. <\/p>\n\n\n\n

    How much money can be garnished?<\/h2>\n\n\n\n

    The maximum that can be garnished for federal student loans is 15 percent of a person\u2019s disposable income. A private student loan lender can potentially garnish up to 25 percent of an individual\u2019s disposable income, but you should check the wage garnishment laws for your state specifically.<\/p>\n\n\n\n

    Take action before the garnishment starts<\/h2>\n\n\n\n

    Wage garnishment is a situation you want to avoid at all costs. Luckily, if you understand what puts you at risk for wage garnishment, you can also be proactive to handle the situation before it spirals out of control. As soon as you start to miss payments, contact your lenders. There\u2019s a chance your lender will work with you to find a solution.<\/p>\n\n\n\n

    Some of the potential options include another repayment plan that\u2019s within your budget or even forbearance. If you can make your first payment on a repayment plan within 30 days of receiving the notice of intent, it can stop the wage garnishment from moving forward. <\/p>\n\n\n\n

    If you\u2019ve already received a notice of intent, review it carefully and look for errors. If there are any mistakes, contact the lender immediately to notify them and discuss the errors. You can request to see proof that you\u2019ve made late payments or missed payments. <\/p>\n\n\n\n

    How to stop student loan wage garnishment<\/h2>\n\n\n\n

    If none of the options above work for you, there are still other options to stop a student loan wage garnishment. <\/p>\n\n\n\n