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Student Loan Garnishments And Hardship

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In a Nutshell

If you default on your student loans, you risk having your wages, taxes, and Social Security benefits garnished. Your credit score will also suffer. To avoid a student loan wage garnishment, or to reduce the amount that will be garnished, you need to take action. You can do this even after you’ve defaulted on your student loan. In this article, we’ll help you learn how to manage student loan wage garnishments, so you can avoid adding to your financial troubles.

Written by the Upsolve TeamLegally reviewed by Attorney Andrea Wimmer
Updated August 16, 2023

A student loan wage garnishment adds to financial hardships. Are you behind on your student loan payments? Chances are you’re already having a difficult time managing your finances. It may be tempting to ignore your student loan debt. But if you ignore it, you’ll default and the problem will get worse. 

If you default on your student loans, you risk having your wages, taxes, and Social Security benefits garnished. Your credit score will also suffer. To avoid a student loan wage garnishment, or to reduce the amount that will be garnished, you need to take action. You can do this even after you’ve defaulted on your student loan. In this article, we’ll help you learn how to manage student loan wage garnishments, so you can avoid adding to your financial troubles.

How Student Loan Garnishment Works

Student loan garnishment starts after you default on your student loan. The timeline is different for federal student loans versus private loans. For federal student loans, you can miss nine months of payments before your student loan goes into default. Once you hit 270 days (about nine months) of missed payments, your loan will drastically change and enter default mode. For private student loans, you could be in default status after only a couple of months. The timing of your default status for private student loans will depend on the terms of your loan. 

If you’ve defaulted on your federal loan, it may be sent to a collection agency. If this happens, you could end up paying collection costs of nearly 18%. This interest is in addition to the principal balance and interest that you already owe. The U.S. Department of Education is entitled to go through an administrative wage garnishment procedure. This allows them to take up to 15% of your wages from your paycheck. Unlike some other forms of debt collection, federal student loan debt does not have to go through the courts for collection. But private student loan servicers must follow the traditional court process. 

Once the administrative wage garnishment process has started, you’ll get a notice of intent to garnish your wages. If you respond, a hearing will be held. After a decision is made, an order of garnishment will be sent to your employer.

If you default on federal student loan debt, the government also has the ability to garnish your taxes. If this happens, any Earned Income Tax Credit you may have otherwise received from your refund can be garnished.

How To Prove Hardship In Student Loan Garnishments

If the U.S. Department of Education sends you a notice of intent to garnish your wages, you may be able to stop the garnishment. You can stop it by proving that it would cause financial hardship. To do so, you must pay attention to your garnishment notice. Before a collection agency or the U.S. Department of Education starts the garnishment process, it must send you a notice of intent to garnish. The notice must be sent at least 30 days before the garnishment begins. 

At this time, you have a right to request a hearing with the Department of Education to object to the garnishment amount. The typical amount is 15% of your wages after deductions are taken out. You can contest this on the grounds that a 15% garnishment will cause you financial hardship. But you’ll need to support your hardship claim with financial records. At a minimum, you’ll want proof of your family size, current income, housing and utility expenses, childcare expenses, medical expenses, and other necessary expenses. Be sure to include court-ordered payments like child support or alimony. 

An easy way to get organized is by making a list with two columns: one for your income and one for your expenses. This will help you and the hearing officer. The easier it is for the hearing officer to understand your financial situation, the easier it will be for you. Put the total at the bottom of each column. Make sure you have a copy of your pay stubs, housing receipts and agreements, and utility bills. If you have any legal documents, such as a power of attorney or court order, make sure to bring them with you to the hearing. 

Your wages won’t be garnished until after the hearing. At the hearing, you’ll be able to explain your financial circumstances and why a 15% garnishment would cause a hardship. The hearing officer will consider certain formulas and laws, such as the Consumer Credit Protection Act (CCPA), before making their decision. If you make minimum wage and have a large family, it’s possible your wages won’t be garnished. After the hearing decision is made, a garnishment order is sent to your employer. 

Even if you don’t have a hardship, you can challenge the wage garnishment if the amount of debt is wrong or if you're not the borrower of the student loan. 

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How To End A Student Loan Garnishment

One way to end wage garnishment is by paying off your entire student loan debt. But for most borrowers, that’s not possible. If you can’t pay off your entire loan, you may still be able to negotiate a monthly payment agreement based on your income. You may also be able to settle your loan for a lump-sum amount that is less than the total amount you owe. 

You may also be able to end a federal student loan garnishment using a loan rehabilitation program. If you use this option, you’ll be required to make nine complete on-time payments over 10 months. The monthly payment amount will be based on your income. You may even get a payment that’s only $10 per month if your income is low enough. That is probably less than the amount they would take to garnish your wages. 

Loan rehabilitation is a great option if you’re considering going back to school because you’ll be able to remove the default status from your account. When your student loan is in default, you’re not eligible for federal student loans. Loan rehabilitation can open new doors for you. 

Student Loan Relief Under The CARES Act

Under the CARES Act (officially known as the Coronavirus Aid, Relief, and Economic Security Act), student loan garnishments have been temporarily paused. Under this act, interest rates have been lowered to 0% and monthly payment requirements have been stopped. This program ended in September of 2021. 

How To Avoid Student Loan Garnishment 

Have you missed a few student loan payments? You’ll likely still have time to take some action to manage your student loan payments before the loan goes into default status. You can manage your federal student loan with an income-based repayment plan or a forbearance or deferment plan. You may also have the option to consolidate or refinance your student loans. 

Start An Income-based Repayment Plan

Under an income-based repayment plan, your lender will make a repayment agreement based on your income. If your income is low enough, you may not have to pay anything each month on your student loan. Your income will be reviewed every year and your loan payment will change according to changes in your income. 

Delay Your Loan Payments Through Forbearance

Another way to manage your student loan debt is to ask for a forbearance. Forbearance lets you halt payments for up to a year. Federal and private lenders have different rules for forbearance, and there are different types of forbearances. If you have multiple federal student loans, you can get a forbearance on more than one loan at a time. Call your lender (or lenders) to request a forbearance and ask about renewal options. 

You can also extend the forbearance period (monthly or yearly delay) for student loans that are part of the Direct Loan Program. Usually, the total forbearance period can’t last more than three years for each loan. An application for a general forbearance will cover a Direct Loan, Perkins Loan, and Federal Family Education Loan, but each loan might have different loan terms. 

Interest will still accrue, and you’ll end up paying more in the long run. You won’t have the bad credit and high interest rates that result from defaulting on a student loan. If you stick with the plan, the forbearance won’t hurt your credit score. That’s an important consideration if you’re planning to apply for a mortgage and want to avoid having any defaulted loans on your credit report. 

With a forbearance, you’ll also have the option to pay just the interest on each monthly payment. If you pay just the interest when your loan is in forbearance, you won’t be stuck with paying interest on the interest that accumulated when your loan was in forbearance. 

Apply For Deferment

If you meet certain eligibility requirements and you’re having trouble making your monthly payments, you can apply for deferment. Loan deferment options include:

  • In-school deferment

  • Economic hardship deferment

  • Unemployment fellowship deferment

  • Military deferment

  • Post-active duty deferment

  • Rehabilitation training deferment

  • Cancer deferment

  • Parent Plus borrower deferment 

  • Perkins Loan deferment

If you attend school at least half time, your student loan payments are automatically deferred. To qualify for an economic hardship deferment, you must either be on public assistance or be employed full time but earning an income that is less than 150% of federal poverty guidelines. 

You can review your deferment options on the official Federal Student Aid website. If you’re considering school loan forgiveness under the Teacher Loan Forgiveness Plan or the Public Service Loan Forgiveness Plan, it’s important to choose a repayment plan that qualifies. 

Consolidate Your Student Loans

If you have more than one federal student loan, you may be able to consolidate your student loan and get a lower monthly payment or interest rate. When consolidating loans, the new interest rate will be an average of the rates on the loans you consolidate. It may take longer to pay off your loan, but again, it’s still better than defaulting on your student loan. There’s no cost to consolidate loans, so beware of any company that offers to consolidate your loans for a fee. 

Have Good Credit? Refinance Your Loan

Refinancing your student loan is also an option. You may be able to find an offer to pay off your student loan and begin payments on a new loan. The downside is that you’ll be paying on a new loan and it could take longer to pay off the balance. It’s also difficult to find refinancing options that are lower than the current low student loan interest rates. Chances are, you’ll need good credit to make this happen. 

Private student loan lenders don’t offer all the same options that the federal government does. You can call your private lender directly to learn what repayment options are available. Some, but not many, private student loan servicers allow income-based payment plans, so be sure to ask about this alternative. 

Let’s Summarize…

After nine months of missed federal student loan payments, the Department of Education may send a notice of intent to garnish your wages. The private student loan garnishment process may start after only a few missed payments. You can avoid having your wages garnished if you take action before you default on the loan. You have several options to manage your loan. These options include forbearance, deferment, consolidation, and refinancing. 

If your wages are garnished, there are still actions you can take to stop it, especially if you can prove financial hardship. Ignoring your student debt won’t help you. Managing new student loan payments using the options offered by the government can help keep your paycheck and tax return in your pocket and prepare you for a future with fewer hardships, not more. 

Written By:

The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

Attorney Andrea Wimmer


Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled... read more about Attorney Andrea Wimmer

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