Student Loan Garnishment Laws

Student loans granted by the federal government or private lenders can provide students with necessary funds to help finance their education. Those who do not pay back their student loans, however, may be subject to wage garnishment.

Facts

Both the federal government and private lenders may garnish your wages to collect funds for unpaid student loans. A private lender must first sue you and request the court's approval to begin wage garnishment. The federal government can initiate garnishment without approval from a court.

Time Frame

Depending on your original contract, you may be subject to wage garnishment as soon as your student loan falls into default.

Considerations

Federal law places limits on how much your wages can be garnished--25% of your net pay or the amount of your net pay that exceeds 30 times the minimum wage, whichever is less. Government garnishments are allowed only 10% of your wages.

Other Effects

A defaulted federal student loan may also result in your income tax return being garnished or withheld entirely.

Prevention/Solution

The federal government allows borrowers who have defaulted student loans to enter a loan rehabilitation program to avoid wage garnishment. Many private lenders offer similar programs, depending on the terms of your original contract.

References

• U.S Department of Education: Common Disputes Involving Defaulted Student Loans: My Wages Are Being Garnished
• U.S. Department of Labor: Wage Garnishment
• U.S Department of Education: Loan Rehabilitation