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Q: How to stop student loan garnishment?

May 15, 2020

Your options for stopping a federal student loan garnishment change depending on whether the garnishment notice has been sent to your employer.

👉 BEFORE garnishment starts

👉 AFTER garnishment has started

Can your wages be garnished for federal student loans?

The Department of Education can garnish your wages once you default on federal student loans. You default after you miss 9 consecutive monthly payments (270 days) and you’re not in deferment or forbearance. Once you default, a wage garnishment order can be sent to your work. Plus, the government can take your tax refund, offset your social security benefits, and stop you from getting new student aid.

Private student loans can garnish your wages only if they sue you and get a judgment against you.

How long do student loan garnishments last?

Federal student loan garnishments last until you pay off the loan. You can stop the garnishment early by entering into a loan rehabilitation agreement. By entering into that agreement, your garnishment will stop after your make 5 monthly payments.

How to stop student loan garnishment before it starts?

There are 5 ways to stop a student loan garnishment before it starts:

  1. paying the loan balance in full
  2. negotiating a federal loan settlement
  3. applying for a Direct Consolidation loan
  4. entering into a loan rehabilitation agreement
  5. entering into a voluntary repayment agreement

For most student loan borrowers, the first two options are out of the question. They simply don’t have the money to pay either the balance or a settlement. Federal student loan settlements aren’t cheap. The federal government typically won’t accept less than 85% of the current loan amount.

Read Full Article: How to Settle Federal Student Loans For Less Than You Owe

Loan consolidation gets you out of default status in about 2 to 3 months. But the new loan will have the collection costs included in your new principal balance. As a result, you can end up owing much more in student loan debt than you originally borrowed.

The student loan rehabilitation program takes about 9 months to bring you defaulted student loans current. During those 9 months, you’ll be making monthly payments to the collection agency based on either your discretionary income or disposable income or your income and expenses. At the end of the rehabilitation agreement, your loan will be sent to a new loan servicer to set up a new repayment plan.

The voluntary repayment agreement keeps your defaulted loans in a default status until you pay off your student debt. The main benefit of this option is that it stops a garnishment order from being sent to your employer. Typically, you would choose to make voluntary payments only if you’ve twice defaulted on the same loan and you can’t rehabilitate or consolidate the loan.

Can you stop a garnishment once it starts?

There are 3 ways to stop a student loan garnishment once it starts:

  1. entering into the loan rehabilitation program
  2. requesting a financial hardship review
  3. filing bankruptcy

The only option that stops the garnishment immediately is filing bankruptcy.

The loan rehabilitation program takes about 5 months to stop the garnishment and requesting a financial hardship review takes about 2 to 3 months.

How to stop student loan wage garnishment after it starts?

Follow these 6 steps to stop a student loan wage garnishment after it starts with student loan rehabilitation:

  1. check to find which federal loans are in default and who has them
  2. contact the US Department of Education’s Default Resolution Group (800-621-3115) to find out which collection agency has your loans
  3. contact the collection agency and ask them if you’re eligible for the student loan rehabilitation program
  4. submit all necessary documents, including the loan rehabilitation agreement letter.
  5. follow up with the collection agency to confirm all documents have been received and approved
  6. make sure all of your monthly payments are made.

Read Full Article: Should I Sign the Loan Rehabilitation Agreement Letter

Financial Hardship

To try and stop the student loan wage garnishment via extreme financial hardship, contact the collection agency and ask to submit a hardship request. The form is not available online.

In my experience, a hardship request almost never ends with the wage garnishment being stopped. More often, I see that the wage garnishment continues at the same amount or is lowered slightly.


  • Can my bank account be garnished for student loans?

    Your bank account cannot be garnished for defaulted federal student loans. But if you have defaulted private student loans, your bank account can be garnished, but only if a private lender sues you and gets a judgment. Until they sue you and win, private lenders can only call you and send you collection letters.

  • Will the student loan default status be removed from my credit report?

    Once you complete the loan rehab program, the Department of Education will contact the credit bureaus to direct them to remove the default status from your credit report. The late payment history, however, will remain. If you get out of default, with loan consolidation, the default status will remain.

  • Which is better for my credit score: rehabilitations or consolidation?

    I’ve had clients tell me their credit scores improve after getting their loans back in good standing under both the rehab program and loan consolidation. So which is better?🤷‍♂️

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