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Student Loan Wage Garnishment: How to Stop it Fast [2019]

February 1, 2019

Looking for how to stop a student loan wage garnishment? Then look no further.

In this post, I’ll share with you how to stop a student loan wage garnishment before it starts. And if it’s already started, I’ll share with you how to stop it as quick as possible so you can take care of your family.

man looking at student loan wage garnishment

Sidenote. This post is all about student loan wage garnishment for federal student loans that are in default. Private loans will garnish only after they sue and get a judgment.

Before I do that, I’ll go over some basics about administrative wage garnishments.

You skip this if you like and get right to what brought you here:

TL;DR The two most common ways to stop garnishments for student loans are loan rehabilitation and loan consolidation. After the garnishment starts, a consolidation is no longer an option. You’ll have to rehabilitate the loan. The garnishment will last until you make 5 monthly payments under the rehabilitation agreement.

Also, there’s a table of contents ☝? if you want to jump ahead.

Let’s get started.

What is an administrative wage garnishment

An administrative wage garnishment allows the U.S. Department of Education and guaranty agencies to garnish your wages for federal student loans that are in student loan default.

Sidenote. If you’re at risk for garnishment, you’re also at risk of having your tax refund offset.

Related.

How Much Can Be Garnished For Student Loans

Up to 15% of your disposable income can be garnished for student loans.

Your disposable income is the amount remaining after you pay health insurance, Social Security, and taxes. It does not include money withheld under a court order (judgment for evictions, repossessions, etc.).

Sidenote. A garnishment for family support (i.e., alimony, child-support) will get paid before a student loan garnishment. And that’s true no matter if the family-support garnishment started after the student loan garnishment.

Student Loan Garnishment Calculator

No matter what, you can protect from garnishment an amount equal to 30 x the minimum wage per pay period.

Since 2009, the federal minimum wage has been set at $7.25 per hour.

What this means is that the first $217.50 of your weekly check can’t be garnished for student loans. But any amount over that can.

Use the U.S. Department of the Treasury’s garnishment calculator to figure out how much can be garnished from your check repay student loans.

How Long Before Student Loan Garnish Wages Start

Wondering how soon does a student loan garnishment start?

Technically, you’re eligible for garnishment once you default on a federal loan, which is after 270 days of missed loan payments.

In practice though, student loans aren’t sent to a private collection agency until they’re 420 days delinquent.

how long before student loan garnishment starts

And that means you will have likely been in default almost a 1.5 years before the notice of intent to garnish is mailed.

Sidenote. With private student loans, the garnishment typically starts 5 to 30 business days after the judgment becomes final. The garnishment will continue until the judgment balance is paid in full.

Once notice of wage garnishment is mailed to your last known address, you have:

  • 15 days to request a hearing, which will postpone the garnishment until after the hearing
  • An opportunity to enter into a voluntary repayment agreement or a loan rehabilitation agreement.

How Long Does Wage Garnishment Last

A student loan wage garnishment lasts until:

  • the student loan debt is paid in full;
  • you’re no longer employed by the employer;
  • the student loan debt is discharged; or
  • you file bankruptcy.1

Can You Get a Garnishment Reduced

You may be able to get the garnishment lowered by requesting a financial hardship hearing.

You can request a hearing before or after the garnishment starts.

If you request it before, the garnishment won’t start until after the hearing.

But if you request it after, the garnishment will continue until the hearing officer decides the garnishment should be terminated.

Hearing Request Before the garnishment starts

You have 30 days from the date notice was sent — not the day you got it — to submit a request for hearing student loan wage garnishment.

Download. Request for Hearing Student Loan Wage Garnishment form

Hearing Request After the garnishment starts

Once started, the federal government normally will wait until the garnishment order has been outstanding 6 months before it will consider a hardship.

In extraordinary circumstances, the Department may consider an objection earlier than 6 months.

You have an extraordinary circumstance if you can show your financial circumstances have substantially changed after the garnishment was entered due to injury, divorce, or catastrophic illness.

Download. Request for Student Loan Wage Garnishment Hearing

Student Loan Garnishment Rules

The authority for administrative wage garnishment comes from the Debt Collection Improvement Act and the Higher Education Act.

The DCIA covers student loan garnishments initiated by the U.S. Department of Education.

The Department published its student loan garnishment rules at 34 C.F.R. §§ 34.1–34.30

The HEA covers student loan garnishments by guarantee agencies for loans made under the Family Federal Education Loan Program (FFELP).

Related. How to Find Out What Type of Federal Student Loans You Have

What Companies Garnish Wages for the Department of Education

The Department of Education uses the following collection agencies to aid the wage garnishment process:
Here’s a list of the collection companies the Department of Education uses:

Guarantee agencies like Trellis, MOHELA, etc. typically handle the garnishments themselves.

How to Stop A Student Loan Wage Garnishment

Before a student loan wage garnishment starts, there are 6 ways to stop it:

  1. Submit proof you’ve held your current job for less than 12 months
  2. Enter into a voluntary repayment agreement
  3. Enter into a loan rehabilitation agreement
  4. Apply for loan consolidation
  5. Request a financial hardship
  6. File bankruptcy

And after it starts, there are only 3 ways to stop a student loan wage garnishment:

  1. Loan rehabilitation
  2. Financial hardship
  3. Bankruptcy

Now, let me go through these one-by-one.

Feel free to use the links to jump ahead to which method of stopping garnishment you’re interested in learning about.

1.0 Stopping a Student Loan Wage Garnishment Before it Starts

The key to stopping a wage garnishment before it starts is to move quickly.

Use one of these 6 methods to protect your check.

1.1 Current job less than 12 months

Were you laid involuntarily terminated from your last job in the past 12 months?

If so, your wages can’t be garnished for student loans until you’ve been reemployed continuously for at least 12 months.

unemployed-less-12-months-garnishment

1.2 Voluntary Repayment Agreement

Don’t want your employer to know you’re being garnished for student loans?

Enter into a voluntary repayment agreement.

This isn’t necessarily the same as the rehabilitation program.

In the past, I’ve used this for clients who can’t rehabilitate their loans because they already rehabilitated once before.

Instead of asking for a rehabilitation agreement, we asked to enter the borrower into a repayment plan whereby they make reasonable and affordable payments and avoid having their wages garnished.

Typically, the monthly payments have been based on their tax return and family size.

Of course, this sounds like the discretionary income formula used with the repayment programs based on your income.

But, in my experience, that doesn’t seem to be the case. For instance, one client would’ve qualified for a $5 payment under the Income-Contingent Repayment plan. The lowest payment the collection agency offered was $50 per month. (We happily accepted that repayment plan over having his wages garnished.)

1.3 Loan Rehabilitation

Loan rehabilitation is the most common way to stop a student loan wage garnishment and get out of default.

The loan rehabilitation program does this by allowing you to make 9 monthly payments over a 10-month period2You only get 9 months for a Perkins Loan[/foootnote].

Your monthly payments can be as low as $5.

Related: Student Loan Rehabilitation: Get Out of Default, Stop Wage Garnishment & Raise Credit Score

1.4 Loan Consolidation

Can’t wait 9 months to get out of default? Consolidate your loans.

A consolidation loan takes your loan that is in default and combines it with your other federal student loans to form a new loan that’s in good standing.

This process takes about 2 to 3 months.

In my experience, you can get the collection agency to stop the garnishment by providing them proof you submitted your consolidation application.

Related: Consolidate Student Loans? [Three Shrewd Reasons, One Terrible]

Two things to keep in mind with consolidating while you’re in default.

First, in order to consolidate, you have to agree to be enrolled in one of the income-driven repayment options (Income-Based Repayment, Revised Pay As You Earn, and Pay As You Earn repayment plans, etc.).

Second, you get to choose your loan servicer. For those of you who work for the government or a nonprofit and want to get Public Service Loan Forgiveness, you have no choice. Your loan servicer will be FedLoan Servicing.

But for the rest of you, you can choose any loan servicer you like.

For what it’s worth, I prefer Great Lakes and Nelnet.

1.5 Stop Wage Garnishment Letter

Can’t or don’t want to enter into a loan rehabilitation agreement or consolidate your loans? Okay. Object to the garnishment because it will cause you and your dependents a financial hardship.

financial-hardship-wage-garnishment

Download: Financial Hardship Objection form

What Paperwork to Submit With Hardship Letter

Support your hardship claim with as much documentation as possible.

You’ll want to include copies of monthly bills for all expenses, and copies of income tax returns, recent pay stubs.

You can also include credit card expenses. But be sure to identify what you used the card to pay (medical bills, utility bills, etc.). Basically, you want to let the federal government know you used the card to pay living expenses and not to buy luxury items.

You’ll list your income and expenses on the Financial Disclosure Statement provided by the Department of Education.

financial-disclosure-statement-garnishment

Download: Financial Disclosure Statement for Student Loan Wage Garnishment

Where to Submit Financial Hardship Request

If the notice of intent to garnish came from the Department of Education, you can submit the hardship request to:

U.S. Department of Education
PO Box 5227
Greenville TX  75403-5227

But if the notice came from a guarantee agency, you’ll want to contact them to find out where they want the request to be sent.

1.6 Bankruptcy

Bankruptcy is the nuclear option.

When nothing else works, the automatic stay in bankruptcy will stop the garnishment in its tracks.

And it doesn’t matter if you file a chapter 7 or chapter 13 bankruptcy, both work the same when it comes to stopping a student loan garnishment.

Having said that, unless you have some other reason to file bankruptcy (medical bills, crushing credit card debt, want to discharge student debt in bankruptcy) avoid this option.

2.0 Stopping a Student Loan Wage Garnishment After Its Started

2.1 Loan Rehabilitation

After the garnishment has started, you’ll have to make 5 monthly payments under the loan rehabilitation agreement before the garnishment stops.

Your rehabilitation agreement will have language that says you must make your payments within 20 days of the date they’re due.

stop-student-loan-garnishment-fast

Because of that, it’s possible to stop the garnishment in 4 calendar months if you make your 5th payment 20 days before its due.

Here’s how you do that.

When you first enter into a loan rehabilitation agreement, you’ll be asked to make your first payment that day and then to schedule your remaining payments using your bank account.

Once you get the schedule, make your 5th payment 20 days before its due.

So if you schedule your payments for the 30th, make your 5th payment on the 10th.

2.2 Financial Hardship

The process for requesting a financial hardship is the same as above.

So go back there for more information.

The only difference is that after the garnishment starts, it will continue until a decision is made to end the garnishment for financial hardship.

2.3 Bankruptcy

Likewise, a bankruptcy works in much the same way before or after a garnishment starts.

The automatic stay in bankruptcy halts the garnishment in its tracks.

There is one big difference, however.

When you file bankruptcy after the garnishment has started, you may be able to get some of the money that was garnished for student loans back.

Bankruptcy has a rule that allows you to get some or all of your garnished wages returned to you within 90 days before you filed your bankruptcy case.

How to Find Out Your Loan Balance After Garnishment

Curious to know how the garnishment affected your student loan balance? Ask the collection agency and the Department of Education for a breakdown of all your payments.

Don’t be surprised if your balance has grown substantially.

The Department of Education has set a collection fee ceiling at 25%.

Sidenote. The Department has been waiving collection fees after student loan borrowers satisfy their loan rehabilitation agreement.

How to Get Wage Garnishment Help

There aren’t many places to turn when you need help with a student loan garnishment.

You can speak with the collection agency. But (a) they likely haven’t been all that helpful thus far, and (b) how can you trust what they tell you.

Another option is to contact the federal student loan Ombudsman through the FSA Feedback System.

Be prepared to wait. It can take the Ombudsman several days to a few weeks before they respond.

Neither of those things, however, are likely to help you quickly.

For that, you’ll want to hire a student loan lawyer.

You’ll be able to trust them and know that they’re working for you to stop the student loan garnishment immediately (or at least as soon as legally possible).


  1. Technically, the automatic stay of bankruptcy suspends the garnishment

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Last updated on February 9th, 2019