You can stop a student loan wage garnishment before it starts by making payment arrangements with the creditor, including requesting a deferment, forbearance, or switching to an income-driven repayment plan. Once your loans default, those options are no longer available until you bring them current.
You can stop a student loan wage garnishment by:
Negotiating a payoff
Applying for loan consolidation
Entering the loan rehabilitation program
Signing up for a monthly repayment agreement
Federal student loan settlements are expensive and out of reach for most borrowers. You’ll typically save 50% of the outstanding interest and 10% of the principal loan balance, and you must pay that amount in 90 days. Learn more about the federal student loan settlement process.
Consolidation gets you out of default fast, but you’ll have to apply before a wage garnishment order is sent to your employer. You can apply for a Direct Consolidation Loan on StudentAid.gov. Read more about how to consolidate defaulted student loans.
Loan rehabilitation is a one-time program. Rehabilitation stops wage garnishment, tax refund offset, and Social Security benefit seizure. To enroll, you’ll agree to make nine monthly payments. Your payment amount will be 15% of your discretionary income or your monthly income with accepted living expenses deducted. Rehabilitation is popular because it’s the only option that removes the default status from a credit report. But that benefit typically doesn’t significantly raise a credit score. Learn how student loan rehabilitation works.
A repayment plan won’t get you out of default, but it can keep your paycheck safe from garnishment if you move quickly. You have 30 days from the date you get the notice of intent to garnish to establish a payment plan and make the first payment. More on the notice of intent below.
Learn More: Collection Costs on Defaulted Student Loans