Is Your Student-Loan Lender Garnishing Your Wages?


Student loans are amazing things. Nowhere in the world of consumer credit is there a loan so easy to get with no apparent ability to repay the staggering amounts that students sometimes borrow. Four years of higher education can run into six figures, after all, and few 18-year-olds have immediate prospects of repaying such sums. Nonetheless, the loans are available and come with more opportunities for debt relief than any other kind of debt, including a number of income-based repayment options, deferments, forbearances, and even forgiveness.

If you default, however, student loans also come with debt-collection powers that exceed those available to most creditors. The federal government can take your tax refund to repay defaulted student loans and garnish your wages without ever obtaining a judgment as other creditors must. And there is no statute of limitations on collecting defaulted student loans.

Avoiding Default Is the Best Defense to Wage Garnishment

If you fall 270 days behind on your student loan payments, the government can declare you in default. Default can have serious impacts upon your finances, damaging your credit score and thus your ability to finance a car, a house, or other things. It also exposes you to the possibility of wage garnishment. Furthermore, when you stop making payments, interest and fees continue to accrue on your student loans, making the situation worse. Finally, once you are in default, the entire balance of the loan immediately comes due. You likely don’t have that amount lying around, and wage garnishment results.

How Can You Avoid Wage Garnishment?

Under wage garnishment, the government can take 15 percent of your paycheck every payday, straight off the top. To avoid default and wage garnishment, you can:

  • Make timely payments. Consider signing up for a monthly auto-pay to avoid any late payments.
  • Sign up for an income-based repayment plan. The government will extend your repayment term and cap your monthly payment at a percentage of your discretionary income.
  • Ask for a deferment or forbearance. You must do this before going into default.

If you are already in default, you may be able to halt wage garnishment in several ways, including:

  • Consolidating your loans. You can combine multiple federal loans into a Direct Consolidation Loan. This can extend your repayment period and cut your payments. You, however, will pay more in interest during the life of the new loan.
  • Rehabilitating your loans. You agree to make a certain number of payments during a set period of time and your lender will reduce your monthly payment.
  • Paying off your debt in full. For most people facing default, this is not really an option, or they wouldn’t face default.

You also can request a hearing with the Department of Education. This will give you a chance to explain your delinquency, and it also will delay wage garnishment. However, after the hearing, you might still face wage garnishment.

If Your Wages Are Garnished to Repay Student Loans in Salt Lake City, Call Attorney Jory L. Trease of JLT Law to Discuss Your Options

If your student loan lender is garnishing your wages in the Salt Lake City area, you need to understand your options. Take advantage of a free case evaluation to determine how you can deal with such a garnishment. Contact me at (801) 797-2098 or through my online contact form.