(HELP) Stop Student Loan Wage Garnishment

It can be very hard to establish yourself when you graduate from college or university. The job market is challenging, and without experience you may not be at the top of the list of possible hires when your dream job does appear.

Unfortunately, even with these difficulties you still must begin paying back your student loans in compliance with your agreement fairly soon after graduation. What will happen if you are unable to follow through?

In this article, we will share what you need to know about student loan garnishment and give sound advice on avoiding it.

Garnishment of Federal Student Loans

If you have taken out student loans and go into default for missing payments, you may soon find your wages garnished.

If your federal student loan goes unpaid for a period of 270 days, the servicer of your loan (entity managing day-to-day processing) may gather information about your employment status, contact your employer and, after due process, commence garnishing your wages.

This means that your loan payments will be taken directly from your wages through your employer.

Garnishment cannot exceed 15% of your total gross income.​

Garnishment of Private Student Loans

If you default on a private student loan, you may also experience wage garnishment. Terms for this type of garnishment vary from one loan to another and one provider to another. Be sure to read and understand all the terms and conditions of your loan before signing on the dotted line.

How Much Warning Do You Have?

One thing you should realize is that you will not suddenly be surprised by a Note of Intent to Garnish.

You will have received plenty of warning in advance in the form of bills, statements, phone calls and all of the other things that creditors and debt collectors do to try to get people to pay their bills.

Garnishment is a last resort, and it takes almost a year for the process to begin.

​It is illegal for a lender to garnish your wages without telling you. Embarrassingly, you will find out about the wage garnishment from your employer who will receive a "Note of Intent to Garnish" to share with you.

Typically, you will have 30 days to respond to this notification before garnishment begins.

How To Stop Student Loan Garnishment

When your employer informs you of the Note of Intent to Garnish, you should read the letter immediately and take note of a few important aspects. The letter your employer receives is required to contain specific information.

Read it carefully to make sure that it contains the following:

  1. Notification of your right to request and inspect copies of the records of your student loans
  2. Notification that you do have a right to request a hearing to present your case
  3. Information regarding your right to establish a payment plan with the servicer of your loan.

​If any of this information is missing or if garnishment is scheduled to begin in less than 30 days, you can request a hearing. In the event that the court sides with you, the servicer of your loan must start the process again from the beginning.

When Should You Request a Hearing for Wage Garnishment?

  • Misunderstanding: If you are actually making your payments in a timely manner, have already repaid your loan or have had your loan forgiven, you should naturally request a hearing.
  • Financial Hardship: You may be able to claim a financial hardship if garnishment of your wages will create a financial burden for you and/or your family. Be prepared to share information about your income, expenses and dependents with the court so that the judge can make a fair decision.
  • Involuntary Termination: If you were fired from your last job and have only been at your current job for less than a year, you should request a hearing.
  • Bankruptcy: In the event you have filed for bankruptcy, the servicer of your loan will not be able to garnish your wages until that process is final. Once the process is final, your federal loan will automatically return to its original 10 year loan elimination payment plan.

​How Do You Request a Hearing?

The hearing process is really not very complicated. In fact, very often the process is completed on the telephone. Occasionally, it is done in person.

If you want to request a hearing, you simply fill out the form which you can find at MyEdDebt.ed.gov. Just go to:


If you are unsure as to whether or not you are entitled to a hearing, the best way to find out is to ask!

​Consequences If You Stop Paying Your Student Loans

It may take a while for your loan servicer to take action against you. In fact, you won't hear anything for nearly a year if you simply stop paying on your student loans. It's important that you realize that during all that time, the amount of your obligation will continue to grow due to mounting interest and penalty charges.

Your failure to pay will be reported to the 3 credit bureau agencies and will impact your ability to get credit, to rent an apartment, to have utilities turned on and generally to take care of any sort of financial transaction that requires a good credit rating.

​In addition to wage garnishment, lenders may have the ability to freeze your bank account. If you live in a community property state, they may also be able to pursue your spouse for the money that you owe.

When your loans go into default, the lender can demand that you pay the entire balance plus interest and penalties at once. This total amount may be nearly 20% more than the amount you originally borrowed. Making arrangements to pay it can be difficult or impossible.

​Steps You Can Take to Avoid the Threat of Garnishment & Other Negative Impacts

If you are having trouble paying your student loans, you should face up to it before your creditors begin hounding you for payment.

Contact them and talk with them about making different arrangements. If this is unworkable, you may still be able to consolidate your loans to get a fresh start.

SEE ALSO: Should I Consolidate My Student Loans?​

Here are 2 steps you can take:

1. Contact the US Department Of Education Debt Collection Service Information Center. If you have received a garnishment letter, their phone number will be contained therein.

2. Ask about applying for a Direct Consolidation Loan that will allow you to make your payments using an Income Driven Plan (e.g. Pay As You Earn or Income-Based Repayment. Fill a Request Here: https://studentloans.gov/myDirectLoan/whatYouNeed.action?page=ibr) which will determine the amount of your payments based on your income or your available budget. This type of loan can be obtained with no fee.

Your new arrangement will have lower and more affordable payments. In fact, if you have a very low income or challenging budget you may not be required to pay at all.

When the loan consolidation process is completed, you will have a clean slate. Your delinquent loans will have been paid, and your new loan will be reported to credit agencies as being current.

Of course, you will still have a negative credit history, but you will have a much better chance of working your way up to credit worthiness again by making regular, affordable payments on your new loan.

If you are given a chance to start again with new payments, it is very important that you do your level best to make them in a timely manner.​