About Student Loan Wage Garnishment
Wage garnishment occurs when a student loan borrower is in default for missing repayments on their student loan debt. When this occurs, the loan servicer reduces the borrower’s wages directly through his/her employer. This is possible with both with federal and private student loans. Let’s see how this process works and what you, the borrower, can do about it.
Federal Student Loan Garnishment
For federal student loans, default occurs if a borrower fails to make a payment for 270 days. The loan servicer is then authorized to learn the borrower’s employment status and initiate the garnishment process. This means your wages can directly be reduced, or garnished, to pay off your student loan debt. Typically, the garnishment limit is 15 percent of your gross income.
Private Student Loan Garnishment
Defaulting on private loans can lead to wage garnishment. Terms vary among loan providers, and wage garnishment details can be found in the promissory note you signed when you took out the loan.
Lenders cannot garnish your wages without notifying you first. The best course of action is to act quickly. Carefully read the notice and decide if you want to challenge the garnishment process. There is often a 30-day period before any garnishment begins.
Qualifying For A Hearing
The Notice of Intent to Garnish from your lender must include information about:
- Your right to ask for and inspect copies of your student loan records
- Your right to ask for a hearing to present your case that garnishment should not be allowed
- Your right to set up a payment plan with the loan provider/servicer
If the notice does not contain all of this information, or if garnishment began prior to the 30 days waiting period, you may request a legal hearing. If the court rules in your favor, the loan servicer must begin the process all over again. It’s important to request a hearing within the 30 days grace period before garnishment proceeds.
Financial Hardship Claim
If garnishment will cause a financial burden for you or your dependents, you can claim financial hardship. The court will decide if you qualify for hardship based on your income, expenses, and number of dependents.
Other Reasons To Request A Hearing
If you have repaid your loan, have received loan forgiveness, or are making payments under an agreement, you should inform the loan provider in writing and request a hearing. Also, if you were involuntarily terminated from your last job and your current employment is less than a year old, you can also request a hearing. Finally, if you have filed for bankruptcy, your loan servicer cannot garnish your wages until the bankruptcy process is finalized.
How To Request A Hearing
The form to request a hearing can be found on the Myeddebt.com website. Most hearings are conducted by phone, but can also occur in person by request.
Wage garnishment can occur due to default on student loan debt payments. Make sure you know your rights and options if you receive a Note of Intent to Garnish.