Does the State of Pennsylvania Allow Student Loan Garnishments?

Students must start student loan payments within months of graduation.

Despite a lull in the economy, college tuition costs continue to rise. Low-interest federally funded loans are available to help students fund the substantial price tag of a higher education. Once a student graduates, it is payback time. Most federal loan programs offer a 6- to 9-month grace period before requiring consistent payments on the loan balance. Neglecting to make payments can get you into hot water. Like all other states, Pennsylvania allows garnishment of your wages to recoup federal funds.

Educational Requirements

If you are the recipient of a loan funded by the U.S. government, it is necessary to adhere to specific requirements while in school. You can lose your funding if you do not maintain a full class schedule. Dropping classes during the semester can also impact your government financial support. Pennsylvania State University, along with other colleges in the state, monitors the activity of students receiving government financing to sort out individuals who abuse loan privileges. Students who drop out must make immediate payments or face wage garnishment.

Garnishment Process

Defaulting on your federally funded student loan in the state of Pennsylvania opens the door to a myriad of issues. Initially, your credit rating is affected. If you consistently fail to make loan payments, defined as not making a payment for 270 days, consider your loan in default. This can have a long-term affect on your financial future. The government has the right to contact your employer requesting wage garnishment. Additionally, any tax refunds from both the U.S. government and the state of Pennsylvania will go directly toward the payment of your loan.

Garnishment and Your Paycheck

The U.S. Department of Education is the agency responsible for pursuing the collection of defaulted student loans. This agency requires no court order to proceed on garnishment. An administrative order sent to the Pennsylvania employer instructs the payroll department to withhold and submit up to 15 percent of the employee’s disposable pay to the agency. Employers subsequently withhold the specified amount from each paycheck. This withholding continues until the employer receives a rescind notice from the Department of Education. There is a severe penalty for employers who do not comply with the garnishment order.

Status Restoration

If your student loan goes into default status, you have some work to do to make amends. Rehabilitation is a program designed to help you get off the default list and back on track. You can accomplish this by making nine voluntary payments within 20 days of the loan due date. Adhere to this payment for a consistent 10-month period. Voluntary payments are those above and beyond any wage garnishment activity. A second alternative to restoring your student financial woes is to qualify for a consolidation loan.

References

• Pennsylvania Monitor: Four Steps to Financial Aid
• Debt Help: Guide to Student Loan Debt, Bankruptcy and Rehabilitation
• The Morning Call; Feds Want to End "Animal House" Way of Going to School; Steve Esack; September 2011
• Mortgage Loan; Student Loan Default: Don't Even Think About It; Gary Mischio
• TG: Handling Default
• Federal Student Aid; Administrative Wage Garnishment - A Guide for Employers; June 2009
• U.S. Department of Education: Employer's Garnishment Handbook

Resources

• College Scholarships: Selecting Federal Loan Programs