If your paycheck is getting smaller because of wage garnishment for federal student loans, you’ve got options to stop it. One way is to arrange a hearing with your loan servicer and explain how it’s causing you a lot of hardship. For private loans, you can try appealing the garnishment or paying off the loan in full. If that’s not possible, you might consider refinancing, declaring bankruptcy, or working out a deal to settle the debt. There are ways to ease the pressure and get your finances back on track!
How to prevent student loan wage garnishments
Numerous steps can be taken to avoid federal student loan wage garnishment. The most obvious is to check the status of all your student loans. Note how much you owe on each, and ensure they are being repaid on time. To do that, log onto Federal Student Aid to track the progress of each loan.
Before a student loan provider takes the action of garnishing wages, require proof that you’ve defaulted on your loan by sending a Debt Validation Letter. The letter forces the lender, whether private or federal, to prove that the debt is yours and that it is in arrears.
Immediately responding preserves your ability to access programs such as student loan rehabilitation. This program can help if you’ve defaulted on your student loans, but your wages are not yet being garnished. To qualify, you will be required to sign an agreement to make a series of nine consecutive monthly payments. The monthly payments will be based on your income and should be affordable.
After you complete the rehabilitation, the default status will be removed from your credit history. However, any late payments will still show up and impact your credit score.
You can also request forbearance or deferment if you meet the requirements. Explore this resource to see if you qualify for the various types of student loan forgiveness the federal government offers.
Remember, not all student loans are federally funded. If you have private student loans from a bank, credit union, or other lending institution, you will also have to make arrangements to repay them.
The difference between federal and private student loans
Federal student loans, as the name implies, are provided by the government and generally include the following:
- No credit check is required.
- The interested rate is fixed.
- Interest is waived for a pre-established grace period for subsidized loans while you’re still in school.
- Income-driven repayment plans are available for specific careers, such as nurses and teachers.
- Deferment and forbearance allow you to temporarily stop payments in the event of financial hardship.
Title III of The Consumer Credit Protection Act limits garnishments to 25% of your disposable income for private student loan providers. However, Title III limits garnishments to 15% of disposable income for defaulted federal student loans.
Federal student loan providers can initiate garnishment whenever you default on a student loan. Private student loan lenders must first file a lawsuit, win a judgment, and have a court order to garnish your wages.
Private loans typically feature fewer options than federal loans. Your eligibility for these loans was probably based on your creditworthiness, and your repayment options are far less flexible. There is rarely a loan forgiveness program and few options for deferment.
You still have options if you’re facing garnishment from a private student loan. Learn more from ZumaZip’s guide on How to Stop Wage Garnishment.
How to stop wage garnishment for federal student loan debt
Stopping wage garnishment for federal student loan debts is complex, but you have options. First, you can dispute the wage garnishment by arranging a hearing with your student loan servicer. Find the contact information for your student loan provider and reach out.
Be prepared to present your dispute and factual information that the garnishment creates extreme financial hardship. Examples include:
- A disability or illness that made it impossible for you to work
- Previous involuntary unemployment
- You’ve been at your job less than 12 months
- Anything that questions the validity of the debt
Once you file the dispute, the garnishment may be suspended until after the hearing is complete and a decision is issued. The decision is usually rendered within 60 days of filing a request for a hearing.
You have nothing to lose, as the worst-case scenario is that the garnishment resumes at the full rate. Other positive results include suspending the garnishment for up to 12 months, the amount of the garnishment being reduced, or they may decide to end the garnishment. Remember, none of these relieve you of your responsibility to pay the debt, but they may be willing to work out a repayment plan that fits your current financial situation.
How to stop private student loan garnishments
Wages garnishment by a private lender typically means you lost a lawsuit brought by the lender, and the judge ordered a Writ of Garnishment. Responding to a lawsuit can help you prevent wage garnishment.
However, if you’ve already lost the case, there are steps you can take to stop student loan wage garnishment:
- Appeal the garnishment by applying for relief.
- Repay the loans in full by selling your assets, borrowing from a family member, or utilizing other reserves to satisfy the lender.
- Refinance your loan with another lender, noting that if you are already in default, you will likely need a co-signer to qualify for a loan.
- Declare bankruptcy. Private student loans can be discharged in bankruptcy.
Negotiate debt settlement and avoid wage garnishment.
Respond to a student debt lawsuit
If the struggle to pay your student loans puts you at risk of wage garnishment, take action now. Check the status of your loans, respond to any notices promptly, and explore all available options for repayment, including forbearance, rehabilitation, and deferment. For private lenders, explore debt settlement. These proactive steps will help protect against wage garnishments and reduce the stress of dealing with financial hardships.
If you’ve been sued for student debt, you can avoid wage garnishment by responding to the lawsuit. To learn more about how to respond to a Summons for debt, check out this video:
