How to Know the Maximum Wage Garnishment for Failure to Pay a Student Loan
Wage garnishment is a lender's last resort, and should be yours as well. If you simply cannot pay off your loans, the Department of Education will begin taking a small percentage your paycheck to pay off your loan. Here's how to figure out the maximum percentage allowed for wage garnishment for failure to pay a student loan.
- Difficulty:
- Moderate
Instructions
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1
Figure out your disposable income. This is what's left of your income (including grants from the government or transfers from friends or family) after deducting taxes.
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2
Understand the norms of garnishment. Generally, the DoE will require employers to garnish 10% of your wages, but they have the ability to garnish up to 15% of your wages.
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3
Know the limits of garnishment. The agency will not deduct the full 15% if your disposable income falls under 30 times the federal minimum wage. So no matter what happens you'll have at least $154.40 (30 times $5.15) of your wages left over after garnishing.
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4
Pay attention to deductions on your pay stub. The agency will garnish what is left after Medicare, taxes, social security and pension contributions are deducted.
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5
Consider other garnishments. Wage garnishment for child support takes priority over student loans.
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6
Understand the max percentage that can be lawfully garnished. The total maximum amount your wages can be garnished is 25% of disposable income. That includes other reasons why your wages might be garnished.
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1
Tips & Warnings
If you return to work within 12 months of being fired or laid off, you can object to wage garnishment. Call or write the Department of Education.
You can always try to renegotiate your repayment. Agreeing to acceptable terms is the best idea to avoid having to pay collection fees as well.
Garnishing is just one thing the Department of Education does to get your money. They can also intercept your tax return, take away federal benefits or even sue you.
