Student Loan Borrowers Can Stop Wage Garnishment, Here’s How

Americans with defaulted federal student loans could soon face wage garnishment as the Trump administration reportedly prepares to resume aggressive debt collection efforts. However, borrowers have several legal options to prevent the government from withholding portions of their paychecks, Forbes reports. 

Federal law allows the government to garnish up to 15% of a defaulted borrower’s disposable wages without a court order. Officials can also intercept federal tax refunds and withhold portions of certain federal benefits, including Social Security payments.

The U.S. Department of Education is reportedly working with the Treasury Department to enlist private debt collection agencies, the Washington Sun reports. An Education Department spokesperson has denied reports of the planned collections.

Borrowers generally enter default after missing federal student loan payments for at least 270 days. Those who have not defaulted can avoid collection measures by maintaining payments or exploring income-driven repayment plans, deferment, or forbearance.

Before wage garnishment begins, the Education Department must generally provide at least 30 days’ written notice. Borrowers can challenge the debt if they believe the amount is incorrect, the loan has already been repaid, or they qualify for discharge.

Those experiencing financial hardship can request a hearing to demonstrate that garnishment would prevent them from covering essential living expenses. Successful challenges may temporarily stop or reduce the amount withheld.

Borrowers can also pursue loan rehabilitation or federal Direct Loan consolidation to resolve defaults and regain access to repayment assistance programs. Rehabilitation generally requires nine qualifying monthly payments, while consolidation replaces eligible defaulted loans with a new federal loan.

However, borrowers already facing garnishment may encounter additional restrictions when pursuing these options.

Bankruptcy may provide another avenue for relief. Filing can temporarily halt eligible collection activities, although permanently discharging student loan debt generally requires demonstrating undue hardship.

Borrowers should review their loan status and update their contact information through StudentAid.gov to ensure they receive collection notices and understand their available protections.

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