Q: How to stop student loan garnishment?

Stanley Tate smiling.

Stanley tate

Student Loan Lawyer

$400M+ student loans managed

listen to this post

You have four options to stop a federal student loan wage garnishment order before it starts:

  1. negotiating a federal student loan settlement
  2. applying for loan consolidation
  3. entering into the loan rehabilitation program and
  4. setting up a voluntary repayment agreement.

If the garnishment order has already been sent to your employer, you have 3 options to stop wage garnishment:

  1. negotiating a settlement
  2. entering into the loan rehabilitation program
  3. filing bankruptcy.

Let's talk about that last option — filing bankruptcy.

Private student loans have to get a court order before they can garnish your wages or take money from your bank account. Before a court order is issued, you'll have to be sued for your private loans either by the original private lender or an assignee.

Filing bankruptcy won't automatically get rid of your student loan debt, but bankruptcy will stop garnishment of your wages for student loans.

In this post, I'll show you how to stop administrative wage garnishment for student loans before it starts. (The easiest way to do that is, of course, to not default in the first place.

Click here to learn How to Stop a Student Loan Garnishment After it Starts

1. Find your defaulted student loans

The first step in stop student loans from garnishing your wages is to find all of your federal loans that are in default.

Here's why.

After defaulting, your loans moved from your loan servicer to either the guaranty agency that owns your loans (ECMC, Trellis, etc.) or to the US Department of Education's Default Resolution Group.

From there, your defaulted loans were likely sent to a private student debt collection agency.

If you have more than one student loan in default, your loans may be sent to more than one debt collector.

So to make sure you stop a garnishment for all of your loans, you need to find all of your loans that are in default.

The easiest way to do that is to use your Federal Student Aid ID to log in to studentaid.gov. This website has information about all the loans you borrowed, including the ones that are in student loan default.

Click here to learn How to View Your Federal Student Loans

2. Contact the Collection Agency

Once you find out student loans, the next step is to contact the debt collector to find out your options.

When I call, I ask the collector:

  • How many loans have been placed in their office?
  • What's the current balance?
  • What's the ED ID Number associated with the borrower's loans?
  • Has a notice of proposed wage garnishment been mailed? If so, what address was it mailed to?
  • Is the student loan borrower eligible for the rehab program?
  • What's the settlement amount they're offering?

My aim in asking these questions is to confirm:

  • the collector has the loans I think they have
  • the balance on those loans with collection fees
  • how much time we have before an administrative wage garnishment order is sent
  • and what repayment terms are available to my client.

3. Establish your repayment plan

The next step is to establish your repayment plan for either bringing your loans back into good standing or paying them off with a settlement.

Most student loan borrowers have 4 options to stop wage garnishment before it starts:

  1. negotiating a federal student loan settlement
  2. applying for student loan consolidation
  3. entering into the loan rehabilitation program and
  4. setting up a voluntary payment plan agreement.

The fourth option — voluntary repayment — doesn't bring your loans back into good standing. You'll stay in default until you pay off the loan balance. So that option should only be chosen as a last resort to prevent a garnishment.

The first 3 options are the options most people choose from.

Which option is best for you depends on a number of things like:

  • Can you afford the student loan settlement?
  • How much will your rehabilitation payment be?
  • Are you trying to go to school ASAP and need to borrow new Direct Loans?
  • Whether you're eligible for loan forgiveness like the Public Service Loan Forgiveness Program?

In my experience, federal student loan settlement is out of the question for most student loan borrowers. They simply can't afford to pay the settlement amount the federal government is willing to accept, which is about 85% of the current loan balance minus collection costs.

Because of that, most student loan borrowers choose between applying for a Direct Consolidation Loan or entering into the loan rehabilitation program.

If you enter into the loan rehabilitation program, your monthly payment will either be based on the income-based repayment plan or your disposably pay, whichever you can afford.

Consolidation vs. Rehabilitation

The main differences between those two options are speed and cost.

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.

Private student loans don't offer a loan rehabilitation program.

Can you stop student loan wage 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. If granted, the financial hardship will either eliminate or reduce the garnishment amount.


What happens to my defaulted student loans after the COVID-19 forbearance ends?

At the start of the coronavirus pandemic, the federal government passed the CARES Act, which stopped collections for federal student debt in default.

Although the coronavirus pandemic is still going on, the benefits of the CARES Act is set to end on September 31, 2020.

Once that happens, the COVID-19 forbearance will end, and student loan debt collectors will be free to start garnishing wages again.

Can your wages be garnished for federal student loans?

The Department of Education can garnish your wages once you default on federal loans.

You default after you miss 9 consecutive monthly student loan 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 or filing bankruptcy.

Can I stop a student loan wage garnishment for 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 seldom ends with the wage garnishment being stopped.

More often, I see that the wage garnishment continues at the same amount or is lowered slightly.

By entering into that agreement, your garnishment will stop after your make 5 monthly payments.

Stop Stressing.
Get expert help
Stanley Tate outside in snow.
Hey, I’m Tate.

I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

Read a bit about me & how I got started with student loans.

get expert advice