How to Stop Garnishment on Student Loans

There are different way to stop a student loan garnishment, depending on the type of student loan you have.
  • Contact the Dept. of Education to prevent wage garnishment.
  • Consider filing a Chapter 13, which results in a court supervised repayment plan.

State and Federal Laws May Help You Stop a Student Loan Wage Garnishment.

The options available to stop or reduce a student loan-related wage garnishment depend on what kind of loan and where you live. The rules are different for federal student loans, such as Perkins, Stafford,  and PLUS loans, and for private student loans. 

Federal Student Loan Garnishment

Federal law allows the Department of Education to garnish 15% of a delinquent borrower’s after tax income for federally insured student loans (34 C.F.R. Part 34-Administrative Wage Garnishment). It may do so as long as the garnishment does not bring the borrower’s weekly pay below 30 times the Federal minimum wage. Currently, you are guaranteed that $217.50 ($7.25/hour × 30 hours) per week is exempt from garnishment. (These numbers are current as of early 2014.)

If you make less than that amount each week, then your wages are exempt from garnishment altogether. Unlike other creditors, the federal government has the right to garnish wages, levy bank accounts, and seize property without first obtaining a court judgment against the debtor (31 USC Chapter 37, Subchapter II). Federal agencies may intercept your tax refund, which is called “offset” (26 U.S.C. § 6402(d) and 31 U.S.C. § 3720A). You also can have your income tax refund taken to pay down your student loan debt.

Keep in mind that no matter where you live, if your loans are federally insured, you can usually be garnished 15% of your disposable wages, regardless of your state laws regarding garnishment for other types of debts.

If you can prove to the Dept. of Education that its garnishment of your wages is causing your family an undue financial hardship, it may be willing to stop the garnishment and work with you in establishing alternate repayment terms. For example, facing foreclosure of your home as a result of garnishment should qualify as an undue hardship.

To try to stop an administrative garnishment, contact the Department of Education’s resource Facing Loan Default. The DOE provides a list of resources available for consumers who have defaulted on their loans. Another good resource to explore is the Student Loan Borrower Assistance Project’s (SLBAP) Administrative Wage Garnishments.

If your federal student loan payments are causing financial distress, review the Income-Based Repayment (IBR) program, and see the Dept. of Education’s IBR calculator. If you do not qualify for IBR, learn if Income Contingent Repayment is right for you.

If you defaulted on your federal loans and want to restart payments, see the Dept. of Education’s Loan Rehabilitation page.

Quick Tip: Check the Dept. of Education’s National Student Loan Data System (NSLDS) to see if the loan is federal. State statutes of limitations do not apply to federal loans, and are subject to collection indefinitely. Student loans not backed by federal grants or guarantees do not appear in the NSLDS, and are therefore private. Private student loans are subject to state statutes of limitations for breach of contract.

Private Student Loan Garnishment

Private student loans, on the other hand, are basically the same as any other unsecured personal loan; the only major difference between private student loans and regular personal loans is that the former are generally non-dischargeable in bankruptcy.

Quick Tip: Need a student loan? See the resource Student Loans resource page. Problem with a student loan? Learn more about Student Loan Consolidation.

Private lenders must file a lawsuit against the borrower and obtain a judgment before they can garnish wages, so it takes private lenders longer to begin a garnishment. A judgment will appear in the "Public Records" area of your credit report.

Quick Tip Concerned about what is appearing on your credit report now? Check your credit report today and get a free credit score instantly.

Depending on where you live, private lenders with a judgment may garnish as much as 25% of the your after-tax wages (15 U.S.C. 1673). However, the amount that can be garnished is specific to each state. See the resource Collection Laws & Exemptions by State to determine how much of your pay can be garnished by private lenders. Texas and Pennsylvania, for example, do not allow wage garnishment for unsecured debts such as private student loans.

To try to stop a garnishment resulting from a private loan, you should contact the creditor to discuss your financial situation and try to negotiate an alternate payment plan. Unfortunately, the creditor may not be willing to stop the garnishment voluntarily, forcing you to explore alternative options.

Quick Tip Some debt settlement companies are now accepting private student loan debt. Get a free consultation with a pre-screened debt relief provider, if you are struggling to pay your private student loans.

Bankruptcy and Student loans

The last option most people consider to prevent garnishment for student loans is filing for bankruptcy protection. since student loans generally cannot be discharged in a chapter 7 filing, you would probably need to file a chapter 13 bankruptcy, which is a court supervised repayment plan in which your student loans, as well as other debts, would be repaid through monthly payments made to the court.

Chapter 13 can be an expensive and long-term commitment (5 years, typically), but if you feel it may be an option to stop your wage garnishment, consult with a bankruptcy attorney in your area to learn if bankruptcy will help improve your financial outlook. Surprisingly, some find their monthly payments under a chapter 13 are more than the amount they would have been garnished had they done nothing, so if you are considering bankruptcy, please make sure to discuss it in detail with an attorney to determine if it is the right choice for you.

Filing a chapter 13 bankruptcy may bring your mortgage current, stop a foreclosure, and allow you to pay now-delinquent payments over the course of your bankruptcy plan. To learn more about your bankruptcy options, visit the bankruptcy information & resources page.

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Comments (246)

Faith G.
Caledonia, MI  |  April 23, 2014
My employer incorrectly garnished my wages at 25% instead of 15%. Can I get that money back. It stated in the paperwork in 3 places not to exceed 15%.
April 23, 2014
Have a heart-to-heart conversation with your payroll person. If he or she refuses to correct the error, then you have two choices: Live with the error, or hire a lawyer to send your payroll person a letter explaining the law.
Sasha B.
Tucson, AZ  |  April 05, 2014
I objected and submitted paper work to end my student loan garnishment. They reduced my garnishment only $25. Is there any way to object again? Will nothing stop the garnishment? This is a nightmare, however it is my fault for allowing this to happen.
April 08, 2014
Is the loan private or federal? What is your reason for objecting to the wage garnishment? Is the loan not yours? Is the balance due incorrect? Is the loan paid? Is the amount garnished unreasonable? If the loan is federal, you can request a hearing with the Dept. of Education to discuss the garnishment amount.
Jon M.
Addison, IL  |  March 29, 2014
I just completed my 9 month rehab program for my defaulted student loans in Feb and now my student loan has been transferred to Fed Loan. I just received a letter from Dept of Treasury that my tax refund for this year is being forwarded to the DOE to pay down my student loan balance. I thought the Offset is removed after completing the rehab program. Any ideas if I can contest the tax return intercept? I was informed last year when enrolling into the program that this tax intercept would not happen after completing the program.
March 31, 2014
Try contacting the IRS Officer of the Taxpayer Advocate at 877-777-4778. See if providing the IRS the date that your loan moved out of default will allow you to receive your tax refund.
Sergio H.
Goodyear, AZ  |  March 25, 2014
I was employed last year and my job required me to drive. Due to some traffic fines I couldn't pay, my license was suspended which caused my employment to be terminated. I am having trouble finding employment because of my inability to drive or pay my fines that amount over 3,000 dollars. This year I was expecting a 6,000 dollar return and Department of Education offset my return. I am a single father of 2 children and am living with my mother until I get back on my feet. She is struggling to keep up with her mortgage, utilities, and car payment herself. I feel helpless. 10,000 dollars in student loans and i have nothing to show for it. I never pursued my degree because i fell behind on my payments and was discharged from the online college I was attending. I've become ill with anxiety and stress and also depression disorders. I don't know what else to do. I was relying on that money, my family was relying on that money.
March 27, 2014
Consult with a lawyer in your state who has consumer law experience or bankruptcy experience. Learn if a chapter 13 might help you get your finances in order.
B. R. S.
Los Angeles, CA  |  March 18, 2014
My undergrad and graduate student loans have doubled and tripled to a total debt, combined with my spouse's, of close to $225,000. We have paid for 10 years on some of them, It didn't make a dent. A loan was mistakenly defaulted. I filled out the forbearance forms, had 12 months left on loan, called and spoke to supervisor and was told all my loans were current and a week later they defaulted. Cut to: they took our married filing jointly tax refund. I had no idea -- it's just gone. We were naive enough to overpay on our taxes. My question is this: I'm the one who stays home, I have no income. I freelance and the pay is horrendous. My spouse has some income, though we are in debt with medical bills. How do I protect my spouse from my loans? On the defaulted loans, my spouse was not a co-signer. How do I stop them from garnishing my spouse's wages on MY loan? If we file separate tax returns would that do it? Can the DOE come after my spouse's wages? Is there anyway to get it all based on me and my spouse out of it? I could go on and on about some of the horrible things this does to people but do your research online and see what happens.
March 28, 2014
Being in debt is stressful, as you indicate. exists to help consumers learn more about their personal finance options. You indicated you reside in California, which is a community property state. This is the source of your fears about your creditors garnishing your spouse's wages. Start with these two reading assignments.

Read the two articles I just mentioned then return here.

You mentioned some or all of the student loans are federal. Have you looked into the payment plans offered by the Dept. of Education?

Lawrence P.
Orlando, FL  |  February 24, 2014
I am in my first month of having my wages garnish. It came out to $550 in my first month. I need this to stop but I am make decent money. It has definitely set me behind. Right now, Conserve is handling it and told me I could do a Rehabilitation payment option on top of the garnishment for 10 months to stop it. They want ether $340 or $580 extra. Have no problem paying them but can't afford both. Do I have any options? Thanks!
February 27, 2014
Is the student loan federal? If so, then see the Dept. of Education's Getting Out of Default page to learn how to rehabilitate your federal loan(s).

Is the student loan private? Consult with a lawyer in your state who has consumer law experience to learn what, if anything, you can do to lift the garnishment or rehabilitate the loan.
Me M.
Coral Springs, FL  |  April 04, 2014
I'm not sure if this will actually help you, but if you take look at Florida Statute 222.11 section 1 paragraph C the way that I interpreted it, keeping in mind I am NOT an attorney, I take it that if you are head of household or head of family with a dependent child, parent or another dependent. You should be exempt from wage garnishment. On a side note, I had my student loan wage garnishment lifted because of this statute. Good luck
Brandon C.
Lubbock, TX  |  February 19, 2014
Can a private student loan company garnish my wages or bank account. I was given a summons for court for a student loan that is unpaid. I'm going to give an answer for this summons, and i really want to work out a payment plan. I made a mistake and couldn't afford the loan payments and just let it go. Now it is catching up to me. I live in Texas and have heard that private student loans can not garnish wages or bank accounts. Any information would be helpful.
February 19, 2014
You mentioned you reside in Texas. See the article Texas Collection Laws to learn more about the state rules in play here.

I am not aware of any Texas rule forbidding private student lenders from the account levy remedy. Please follow-up on the page I just mentioned with a comment indicating the source of where you heard or read the levy rule, and we'll change the information on that page if necessary.

Consult with a Texas lawyer immediately to discuss your response to the summons.
Wendy R.
Bensalem Township, PA  |  February 08, 2014
any advice will be appreciate my loans were consolidated on jan 27,2014 and now my taxes are still being offset even though I am in good standing and owe nothing to dept od ed or national student loan all I got was the run around we can't lift the offset we sent a letter and we are still taking your taxes but will send them back in 6-10 weeks ...and did I mention us dept of ed said they weren't taking them when I first called and I was clear and when I called again I was set for offset but have no balance or anything owed to them and as far as National student loan they refused to give me a supervisor at all and told me they will send my check back and i owe nothing but they are taking my taxes but will send them back I filed my taxes because I have letters and called numerous times to make sure everything was ok and it was or so I thought now I am set to recieve my taxes feb 12 and not going to because of this BS and getting evicted w/2 small children waiting for taxes I am not receiving anytime soon is there something i can do ? lawsuit ? this is wrong so wrong ...
February 11, 2014
Here are a few suggestions:
  1. Call the IRS Office of the Taxpayer Advocate, at 877-777-4778.
  2. Contact the Federal Student Aid Ombudsman.
  3. Contact your Congressperson and Senator. Ask for the "constituent service" department and see if you get your elected representative to assist you. Sometimes, they have the power to get some action taken.
  4. Consult with a lawyer, to see if the student loan lender violated its contractual obligations with you or if there is any cause of action that you can take against them.
A.N. W.
Collinwood, TN  |  February 17, 2014
I am dealing with the same type issue except that I am currently under chapter 13. I contact the student loan services prior to receiving my taxes as well as my lawyer and just as the person before stated they all said No there wasn't an offset scheduled. Then all of a sudden they are offset and there is nothing I can do about it. They are now telling me they can stop me from getting my license when I finish school in August. I don't know what to do really... Any advice at all?
February 18, 2014
Talk to your lawyer about the offset, and if it was allowed under a chapter 13. If it was, then adjust your personal allowances on your W4 so you see more in your take home pay and less is subject to offset next year.
Josh B.
Denver, CO  |  February 07, 2014
I have a private student loan that has been wage garnished for the past 7 years. From the online courts website the originating amount was $42,039 and is now down to $14,117. I have contacted my original lender to discuss payment options to get out of the garnishment and they are willing to work with me, but they are still telling me my amount due is over $40,000. I'm confused. Any advice on who I could contact or learn more information. I live in Colorado, but the loan is with Iowa Student Loan Liquidity. Thanks!
February 10, 2014
Get a print-out from the court garnishing your wages, and send it with a polite but firm letter to the loan servicer that you want to discuss your options for resolving the debt.
Brandy C.
Gresham, OR  |  February 05, 2014
I have a Treasury offset for two defaulted loans. I had been making rehab payments on one of them, but due to a wage garnishment on an old medical bill, as well as a garnishment letter for old traffic fines, AND debt from old accounts with my now ex husband (who lives out of state and does not currently pay child support)---I recently filed Chapter 13 bankruptcy. I was told the bankruptcy should lift the offset and I may be able to receive my tax refund--at least for this year. I called the numbers given to me by the Treasury and gave them my case number but the offsets are still showing up on the hotline. It would really help me and my two small children to receive a refund, so I am wondering if there is any more information--my lawyer is worrying me with the info i get (seems to go back and forth and very hurried). Im also having to paper file my taxes and it may take some time--so I am wondering if there is a time frame on lifting the offset since the loans student themselves arent discharged.
February 06, 2014
The best source of information will come from the IRS itself. Call the IRS Office of the Taxpayer Advocate at 1-877-777-4778.
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