What Is Student Loan Wage Garnishment? 

Student loans are a pressing concern for many Americans. In fact, approximately 14.4 percent of U.S. adults had a student loan in 2019, amounting to $1.41 trillion total in outstanding student loan debt. Those numbers have been increasing year over year, and the total is projected to reach $2 trillion by 2024.

On top of paying back student loans, some borrowers may also have to deal with student loan wage garnishment if they default on their loan, essentially meaning that their student loan servicer can have their employer withhold up to 15 percent of their disposable pay as a method of collecting their defaulted debt rather than take the borrower to court. Whichever amount is lower—15 percent of their disposable income or income in excess of that protected amount—can be garnished.

Can Student Loans Garnish Wages?

Student loan wage garnishment is a legal practice. Student loan servicers can choose to garnish a borrower’s wages without taking them to court. Garnishment can be up to 15 percent of total pay, but a certain amount of pay is protected: 30 times the minimum wage.

While both private lenders and the federal government can garnish wages on defaulted loans, federal garnishment is allowed “administratively” with no legal action, while private lenders typically need to take borrowers to court first.

It is not just students who may be at risk as a result of student loan wage garnishment. Indeed, if family members cosigned a loan, lenders can garnish wages from them as well.

How Long Do Student Loan Wage Garnishments Last?

Withholding pay through student loan wage garnishment can last either until the defaulted loan is paid in full, or until the loan is removed from default. In some cases, borrowers can have the wage garnishment delayed or stopped by coming up with a different agreement, objecting to the garnishment, and more.

What Are the Student Loan Wage Garnishment Laws?

Student loan wage garnishment laws require that a borrower is sent a notice about the servicer’s intention to garnish their wages in 30 days, along with the nature and amount of the debt, their ability to inspect and copy records related to the debt, their right to object to garnishment, and their option to avoid garnishment by voluntary repayment.

Under student loan wage garnishment laws, borrowers are also able to enter into a written agreement to establish a voluntary repayment plan, as long as the Education Department finds the terms agreeable.

Borrowers must also be given an opportunity for a hearing, at which they can present a number of potential objections. For instance, they might object to the existence, amount, or enforceability of the debt. Some may find that garnishment of 15 percent of their disposable pay is an extreme financial hardship, and can object to garnishment on that basis. Others may have been employed for less than 12 months after a previous involuntary separation from employment and can object to garnishment because of this.

Garnishment may be withheld if a borrower files a timely request for a hearing (within 30 days of the receipt of notice), which delays the garnishment until the hearing takes place and a decision is made.

After a garnishment appeal, the government has 60 days to issue a decision. If it misses that deadline, the garnishment should not begin until the decision is made.

It is also important to note that student loan wage garnishment laws protect borrowers from losing their job or being subject to other disciplinary action as a result of garnishment. If an employer fires, refuses to hire, or otherwise takes action against a borrower because of the garnishment action, the borrower can seek legal action.

How to Stop Student Loan Wage Garnishment After it Starts

Wage garnishment can be stopped after it starts, though this is less common. If you do not request a hearing within 30 days of receiving the garnishment notice, but instead do so afterward, the garnishment generally will have begun in the interim. However, if you request and win a hearing on one of the aforementioned bases (extreme financial hardship, etc.), the garnishment may be brought to a halt at that point.

There are a number of challenges that borrowers can make to wage garnishment. For instance:

• Involuntary termination from last employment with less than 12 months at your current job
• Repayment of the loan
• The school failed to pay the borrower an owed refund
• The borrower is dead
• The borrower has become totally and permanently disabled
• The loan is not enforceable
• Others

In some cases, borrowers may be eligible to challenge wage garnishment if their school closed either while you were enrolled or within the 120 days prior to the school’s closure. Borrowers can also seek discharge of a loan if a school falsely certifies that a borrower is eligible for financial aid.

To stop student loan wage garnishment after it starts, borrowers may also be able to consolidate their loans into a new loan, seek loan rehabilitation—that is, get back on track with, pay off the debt, or enter a repayment agreement.

The best way to stop student loan wage garnishment is to prevent it before it starts, which means as soon as you begin missing student loan payments, before you go into default. This is when you can get in communication with your loan servicer and try to find other repayment options, such as income-based repayment plans, deferment, or forbearance.

Student Loan Wage Garnishment Litigation

Some borrowers allege that their student loan servicers have violated their consumer rights in their debt collection practices, taking advantage

If you have had your wages garnished by a student loan servicer like FedLoan or American Education Services (AES) within the last six years, you may be able to join a student loan wage garnishment class action lawsuit investigation.

Filing a lawsuit can be a daunting prospect, especially while dealing with something as financially serious as student loans, so Top Class Actions has laid the groundwork for you by connecting you with an experienced student loan wage garnishment attorney

Consulting a student loan wage garnishment attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.

Join a Free Student Loan Wage Garnishment Lawsuit Investigation

If you had had your wages garnished by FedLoan or AES within the last six years, you may qualify to join this student loan wage garnishment class action lawsuit investigation.

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This article is not legal advice. It is presented
for informational purposes only.