What Is the Most Student Loan Companies Can Garnish?
The limits on the amount a student loan company can garnish depend upon whether the loans are from private lenders or federal loans from the U.S. Department of Education. If you don't know which kind of loan you have, you need to call the lender listed on your loan paperwork. Participating private lenders such as Sallie Mae often service loans for the Department of Education.
Other People Are Reading
-
Disposable Income Limits
-
How much a student loan company can garnish from your paychecks also depends on your disposable income. For garnishment purposes, disposable income is your net pay after state and federal tax deductions and does not include any voluntary deductions for things such as health insurance or retirement account payments. If your disposable income is less than 30 times the current minimum wage, your income is exempt from garnishment.
Federal Student Loan Garnishments
-
The limit for garnishment for federal student loans is 15 percent of your disposable income per pay period. If your wages are above the disposable income limits, they are subject to garnishment. Federal student loans include any loans made or insured by the Department of Education, the Federal Family Education Loan Program or the William D. Ford Direct Loan Program. This garnishment limit applies to private lenders servicing your student loan on behalf of the Department of Education. The Department can also take your state and federal income tax refund checks to use toward payment of your federal student loan debt.
-
Private Lender Garnishment
-
The limit for garnishment for private student loans is 25 percent of your disposable income per pay period. This garnishment limit is for private lender loans only and not federal loans serviced by private lenders. Private lenders can seize your state income tax refund check to use toward payment of your student loan debt. However, they cannot take your federal income tax refund check. These lenders have to win a lawsuit against you before they can begin garnishing your wages or before they can seize your state income tax returns.
Alternatives
-
If your federal student loan is in default, you can contact the Department of Education's Administrative Wage Garnishment Division and work out a voluntary repayment program. As long as you stay current on your repayment plan, you will avoid wage and income tax refund garnishments. You can also contact your private lender to work out a payment arrangement to avoid wage garnishment. It is important to note that private lenders do payment arrangements at their discretion.
-
