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How to Stop Garnishment on Student Loans

Student Loan Debt
HIGHLIGHTS
  • 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 Wage Garnishment Related to Student Loans.

The options available to stop or reduce a student loan-related wage garnishment depend on whether the delinquent student loans are federally insured loans, such as Perkins, Stafford, PLUS loans, or 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. It may do so as long as the garnishment does not bring the borrower’s weekly pay below 30 times the Federal minimum wage. As I write these words, this means a borrower is guaranteed $217.50 ($7.25/hour × 30 hours) per week exempt from garnishment. (These numbers are current as of early 2011.) 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. This is called administrative wage garnishment.

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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.

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

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.

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.

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.

Depending on where the borrower lives, private lenders with a judgment may garnish as much as 25% of the borrower’s after-tax wages. However, the amount that can be garnished is specific to each state. See the Bills.com 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.

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.

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.

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.

More About Student Loans
Need a Student Loan? Start Here!
Student Loan Consolidation
Private Student Loan Default
What to do if You Default on a Federal Student Loan
How to Pay Off a Student Loan
Help with Your Student Loan Debt
Settle a Private Student Loan
Public Service Loan Forgiveness

Chapter 13 can be an expensive and long-term commitment (5 years, typically), but if you feel that it may be an option to stop your wage garnishment, you should contact a bankruptcy attorney in your area to find out if bankruptcy will help improve your financial outlook. Surprisingly, many people find that 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.

Another thing to consider is that filing a Chapter 13 bankruptcy may help you by bringing your mortgage current, stopping the foreclosure action and allowing you to pay off the delinquent payments over the course of your bankruptcy plan. To learn more about bankruptcy, I encourage you to visit the Bills.com bankruptcy information & resources page.

Comments (119)


Erin G.
T/o Bloomfield, NJ  |  February 03, 2012
I have a huge amount of student loan debt 300k mostly private and through sallie mae. I was making payments but could not afford the full monthly payment owed along with my other loan payments and bills. It was sent off to a collection agency. I live in NJ and make decent money. I'm also a single mom and im concerned about 25% of my disposable income being garnished. Where can I get guidance on this issue. I've been told in past to default on all loans and let all federal and private loan providers garnish as it might be less than me trying to pay everyone. any advice or can you direct me to an agency that might help me, I need to know what can and can't be garnished, frozen, taken etc.
Bills.com
February 03, 2012
The last thing I would advise people to do is stop payments on all loans because a garnishment would be cheaper than minimum payments — especially for student loans. Consult with a lawyer in your state who has consumer law experience to receive advice tailored to your situation. Your income, debt load, expenses, and so on matter. Ask the lawyer about a chapter 13 in your situation.
Brenda B.
Columbia, SC  |  February 02, 2012
I wasn't 270 days late on my Perkins loan, however the University put me into default and sent my loan to a collections agency. The agency suggested I consolidate my loans, which I did. I just received a letter today from the consolidation company that the loans were disbursed on 12/30/11. However, the university took my income tax return. Wouldn't the consolidation have taken care of any money that I owe?
Bills.com
February 02, 2012
It is not clear why you were put into default, but I am glad that you were able to consolidate your loans and arrange a payment schedule. If your income tax refund was garnished, it should have been applied to the outstanding debt. Check your numbers carefully to verify how much you owed before the consolidation, and how much you owe after. If there is a discrepancy, then speak with the servicer. If the offset has caused you financial hardship the read the Dept of Education's page about disputes for IRS offset.
Ronald C.
Leckie, WV  |  January 21, 2012
I have one more payment on my defaulted school loan how do I make sure they stop wage garnishment when it's paid?
Bills.com
January 21, 2012
Talk to your employer's payroll people to make sure they are aware the garnishment order is satisfied, and your paycheck should no longer be garnished. Be sure to bring documents to your meeting so that you have evidence to back your statement.
Eric T.
Long Beach, CA  |  January 18, 2012
Hello, I have a student loan after going to a 4yr University. Sadly I have gone into default and the govenrment has been garnishing out (I believe) 10% for my post taxes wages per pay period. This has been going on for almost 7-8yrs now, and I'm not sure when it's suppose to end. Is there 1) a way I check my current balance of my loan? and 2) Is there any way for me to discontinue the wage garnishments, and go back to being able to pay it off manually? Thank you very much for all you help!
Bills.com
January 20, 2012
You mentioned your loan is federal. See the Dept. of Education’s Loan Rehabilitation page to learn how to remove the wage garnishment.
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Eric T.
Long Beach, CA  |  January 20, 2012
Thank you very much for your help Bill. I emailed them for more info, thanks again!
Lola B.
Greenville, SC  |  January 13, 2012
I am in default on my student loans, and recently received a call advising me I had to start making payments of $109 a month or my wages would be garnished 15%. I called them and told them I could pay $30 a month after explaining, how much I make minus all my bills not including food or utilities i have $100 a month left. They told me I could make that payment but they may still garnish my wages. Any thoughts? Advice? Help? Is appreciated. Thanks
Bills.com
January 13, 2012
Is your student loan federal? If so, the Dept. of Education has the ability to do what it calls an Administrative Wage Garnishment (AWG). If you cannot afford the 15% garnishment, you can request a hearing with the Dept. of Education to reduce the amount of an AWG. See the Dept. of Education's AWG Request For Hearing forms (PDF) to start the process.

Reread the original answer above and follow the links that apply to you to learn if you can defer or forebear your student loan payments.
Dennis C.
Windsor Mill, MD  |  January 13, 2012
I had previously paid back student loans. I had to take out several due to the fact that my parents could not afford to assist with college expenses. I apparently did not repays 2 loans which totaled about $15k. This amount was from 1992. I attempted to set up payment which I could afford of $250.00 per month. The Department of EDUMACTAION (YES I INTENTIONALLY SPELLED THIS INCORRECTLY) rejected the offer and garnished my wages at 15%. At the time I was making around $38k and now am making about $43k. The repayment amount on $15k with 12 years of interest compounded at 8% came to about $43k. In the past 2 years, I have paid nearly $11k and am rapidly approaching the principal amount of $15k. This garnishment has forced me to obtain a second job working 5-6 nights per week to make up for the $380-$400 dollars per month that the dept of education takes from my check. This amount being taken has brought the little bit of saving I had to almost nothing (down to $142 in savings account). I have also done some checking on line and it is reported that a number of our elected officials in Washington have defaulted student loans from the 70's and 80's and yet their wages are not being garnsihed. anyway, my question is, is there anythng I can do to ask that the garnishment amount be reduced to maybe 8 or 10%? This is starting to become a major financial burden.
Bills.com
January 13, 2012
You described what the Dept. of Education calls an Administrative Wage Garnishment (AWG). You can request a hearing with the Dept. of Education to reduce the amount of an AWG. See the Dept. of Education's AWG Request For Hearing forms (PDF) to start the process.
Tina P.
Jacksonville, FL  |  January 12, 2012
All my student loans are federal. I thought I was in forbearance, but apparently that was only for the loans I took out for my undergrad degree. The ones I took out for my Master's are delinquent & I didn't know cos the notices were going to my old address. Yesterday I received a notice, at my current address, that they were going to garnish my wages. I called them today & set up payment arrangements to stop the wage garnishment but they said it was too late to do anything about my tax refund. I don't trust them though because they're collection agents & will say whatever to get their $. I NEED that tax refund to move into a cheaper rental so I can pay back all these loans. Any help or guidance would be greatly appreciated.
Bills.com
January 13, 2012
If you are being garnished for a federal loan, I don't believe there is any action you can take to ensure that you will get your tax refund, aside from getting the loan back into good standing. Perhaps filing later rather than sooner will allow enough time to pass so that the IRS is aware that you're no longer in collections. Maybe speaking directly to the IRS (800) 829-1040 would give you some concrete information about this.
Al Y.
Jonesboro, GA  |  January 08, 2012
I have two loans, one federal and one private. The federal one was from a Master's Degree that I completed in 2004. The loan was in forbearance due to me being enrolled in a Doctoral program. I am a school teacher, and I should qualify for the loan forgiveness. I had to take a leave of absence from school due to my parents' illnesses (they live almost 400 miles away, and I had to commute sometimes twice weekly), and I was removed from the Doctoral program due to a clerical error. Before I could return to school, the loan payments kicked in for both loans, to the tune of about $800/month. When I contacted the private lender, they didn't provide much help; and they stated that the forgiveness program had been discontinued due to budget issues (this was late '08 or early '09.) Unfortunately, I didn't follow up; I took their word, and tried to pay. One went into default and garnishment, I tried to continue to pay the other until I lost my home - after that, the second went into default. I am now being garnished just shy of $1000/month; and I'm having trouble covering living expenses. Is there any help other than bankruptcy (reorganization)? Is there a consolidation loan of some sort for a person that now has horrible credit, but has still been making these ungodly payments (even though it is 'involuntary')? The only offer I've been given is the rehabilitation program that would surely send me into homelessness.
Bills.com
January 09, 2012
I am not aware of any programs for consolidating debt for people with horrible credit. The Chapter 13 bankruptcy option you mentioned could offer some payment relief, depending on how the court views your living expenses. I suggest that you consult with a bankruptcy attorney.
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