Must-Knows About Student Loan Wage Garnishment
Thinking of defaulting on your student loans? You may want to think again!
With more and more students graduating college with high student debt, it’s easy to understand the struggles you may face to repay them. This doesn’t mean you should default on your loans all together! There are many consequences to ignoring your student debt, wage garnishment being one of them. Here are some important things to know about student loan wage garnishment.
What is student loan wage garnishment?
One major consequence of defaulting on your student loans is a process called wage garnishment. This means your employer will withhold money from your disposable income each pay period to help satisfy the loan balance. For federal loans, the government can go after your wages without a judge’s permission while a private lender can only garnish your pay after they receive a court order.
How much can be garnished?
Failure to make a payment on your federal loans for more than 270 days (depending on terms), results in a default on the loan. According to Student Loan Hero, the default can lead to a wage garnishment of up to 15% of your disposable income. Wage garnishment for private loans can be a bit different since they vary by state. While not every state allows wage garnishment for unpaid private loans, for those states that do, Tuition.io says private lenders can take up to 25% of your paycheck.
How will I be notified of a wage garnishment?
Fortunately, your wages are not garnished without notice. The U.S. Department of Education will send you a letter alerting you that the garnishment process will begin in 30 days. According to NOLO, included in the letter must be the amount owed on student loans, how to obtain a copy of loan records, how you can enter voluntary repayment plans, and how you can request a hearing on the garnishment.
Can I challenge the garnishment?
If the Department of Education or a private lender have sent you a letter to garnish your wages, you can request a hearing to challenge the intent. If you have already paid off a loan, started a repayment plan, filed for bankruptcy, or have been laid off, challenging the garnishment is a good idea. You might want to speak with a financial attorney to help you with the garnishment.
Can my employer fire me?
It is unlawful for your employer to fire you because of a wage garnishment due to unpaid student loan debt. However, in some states this protection is void if you have more than one unpaid debt that has led to a garnishment.
How can I avoid wage garnishment?
Wage garnishment is usually used as a last resort to collect on the loan. This doesn’t mean you should flirt with default! There are many ways to ease the burden of student loans. Work at paying your loans on time. It’s understandable that this can be hard but avoiding payment all together will only make things worse. Talk to your loan servicer about future options and let them know you’re having trouble with payments. For federal loans, consider looking into government repayment options which can make your monthly payments easier.
If student loans are weighing you down, seeking advice can make a difference! If you’re struggling, there’s no need to go at student debt by yourself! Consider giving us a call and see what relief options are available to you! Are you defaulting on your student loans? What else should people know about wage garnishment? Feel free to leave your comments below!