What Is Student Loan Garnishment & How Does It Happen?

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Stanley tate

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Student loan garnishment allows loan holders to recover the outstanding loan balance for defaulted loans. When your loan is garnished, your employer is required by law to withhold a portion of your paycheck and send it to the creditor.

How much can a student loan garnishment take from a paycheck? Lenders and collectors can garnish a maximum of 15% of your paycheck for federal student loans.

To avoid (or prevent) this situation, let’s talk about student loan garnishment and what you can do when your wages are garnished.

What happens before garnishment?

You don’t wake up overnight to a garnishment — several steps happen first as you fall behind on your student loans.

The steps that lead to student loan garnishment are:

  1. The loan becomes delinquent.
  2. The loan enters default.
  3. The loan is handed over to a collection agency, which will offer a repayment plan.
  4. If you do not agree to the plan or your payments lapse, the loan holder may pursue garnishment.

Your student loan becomes delinquent when you submit a late payment. After several missed monthly payments, your student loan goes into default. This timeline is determined by the type of loan.

Federal student loans go into default after around 9 months of non-payment, while private student loans typically default after around 4 months (but the time frame varies by lender).

Federal student loans become due in full when you default, including the total of both the principal and interest. Having a defaulted student loan prevents you from taking advantage of repayment plans, student loan forgiveness, and options like forbearance or deferment.

When you default on your student loan, federal and private lenders hand it over to a collection agency. Collectors help borrowers set up repayment plans that allow them to resume regular monthly payments.

If you’re still unable to make your student loan payments, they can begin administrative wage garnishment, and a portion of your disposable pay will be withheld to pay back your student loan.

Delinquent loans

A student loan becomes delinquent after the first payment that is late or missed. Fortunately, you can pay the amount you owe and resume your monthly payments to avoid further action.

You may also be able to apply for a deferment, which allows you to stop paying student loans temporarily. This occurs when a borrower faces extreme financial hardship.

If your student loan becomes delinquent due to a temporary hardship, you can apply for forbearance. Student loan forbearance lets you stop payments temporarily and bring your loan into good standing, although interest continues to accrue during this period.

If you continue to miss your student loan payments, your loan will go into default and further damage your credit report.

Loans in default

If you received your loan through the Federal Family Education Loan (FFEL loan) or William D. Ford Federal Direct Loan Program, your loan goes into default after 270 days of delinquency.

After your loan has gone into default, It’s possible to make repayments early and get out of default. But after 270 days, you’ll need to consider consolidations or a rehabilitation program.

Private loans usually default faster than federal loans, and those terms are determined by the lender. If you’re unsure, check your promissory note for the details on when your private student loan enters default.


Once your loan is in default, a collection agency will handle it on behalf of the loan servicer. The collector must notify you 30 days before any garnishment takes place. You can negotiate with the collection agency and set up a payment plan that works for you.

You can also appeal the garnishment of wages by requesting a hearing within the same 30-day period. Once a garnishment order begins, you can still file an appeal, but you can’t stop the collector from garnishing wages while waiting for your appeal to be approved.

Garnishing wages and benefits, tax offsets, and even removing money from your bank account are collection activities designed to ensure that lenders receive payment for their loans.


Collection agencies will give you a 30-day notice before your wages are garnished to repay student loans. You can have more than one student loan garnishment order at the same time.

For private loans, the collection agency must sue to garnish your wages. Once a court gives permission, a private lender can use garnishment to collect on your debt.

However, these rules do not apply to federal student loans — they can garnish your social security benefits, tax refund, and wages without taking you to court.

Student loan garnishment FAQs

A student loan garnishment reduces your disposable pay. This can make it difficult for you to meet other financial obligations.

  • How much of my paycheck can garnishment take? Garnishment can take a maximum of 15% of your paycheck for defaulted student loans. For example, if your take-home pay is $2,500 per month, the administrative wage garnishment can total as much as $375.
  • What does a student loan garnishment have to do with my tax return? The Treasury Offset Program collects unpaid student loan debt owed to federal and state agencies by withholding funds from tax refunds and social security benefits. These enable government agencies to collect on unpaid debts from student loan borrowers.
  • How long do student loan wage garnishments last? Student loan wage garnishments last as long as there is an outstanding balance due. If you take the steps to stop an administrative wage garnishment, it can be removed after you have made 5 qualified payments under a rehabilitation program.

Garnishment and your credit score

The longer your wage garnishment is in place, the more it will impact your disposable pay. It can also affect your credit score, which can negatively impact other financial goals.

How does a wage garnishment affect your credit score? A wage garnishment affects your credit score by making it part of your public financial record. Creditors report accounts that are defaulted. A student loan wage garnishment won’t appear on your credit report, but it negatively affects your credit score.

It can take years to repair your credit score. So, avoiding or stopping student loan garnishment as soon as possible is critical to your financial future while protecting you from collection costs.

Other costs for student loans in collections

There are costs for student loans in collections that you need to be aware of. Student loan borrowers are responsible for collection fees that the U.S. Department of Education pays collection agencies.

A private collection agency earns a commission for payments they receive. These collection costs can add a substantial amount of money to the total amount you pay.

Garnishment of tax refunds is another cost for student loans in collections. Like your wages, any money you receive after filing taxes can be withheld by the federal government to pay federal student loan debt.

What is the difference between a student loan wage garnishment and a student loan tax refund garnishment? The difference between a wage garnishment and a student loan tax refund garnishment is that one garnishes a portion of your disposable pay while the other garnishes your tax refund — known as a tax offset.

A tax refund garnishment occurs when your federal student loan is in default for more than 270 days. Your tax refund cannot be offset for defaulted private student loans, only federal ones.

The loan holder will provide you with a notification that your tax refund will be garnished. The loan holder must refer defaulted student loans to the Treasury Offset Program to impose a tax refund garnishment.

Student loans & COVID-19

The onset of the coronavirus pandemic triggered many measures to provide financial support to Americans. The situation has left many students asking if student loan garnishments are on hold.

Student loan garnishments are on hold through September 30, 2021. This resulted from the CARES Act passed in March of 2020, which paused payments and interest for student loan borrowers, and the American Rescue Plan Act, which extended many of these benefits.

This pause protects most federal student loan borrowers from missing payments, which would cause their loans to become delinquent or go into default. However, this doesn’t extend to private loans or Federal Perkins Loans.

Who can I contact if wages are being garnished?

You can contact the original loan servicer if wages are being garnished. They can help you determine the best settlement options for your circumstances.

You can also contact the Default Resolution Group (DRG). This is part of the U.S. Department of Education that handles student loans that have gone into default.

Contacting the Default Resolution Group lets you identify the available options for rehabilitating your student loans and removing a default from your credit records.

If you find the options overwhelming or are dealing with private loans, a student loan lawyer can help you resolve your student loan issues. They can take the time to get to know your situation and explain the options you can use to resolve your student loan debt.

Stopping student loan garnishment

You may be wondering, “Can I stop a student loan garnishment once it starts?” Yes, you can stop a student loan wage garnishment to protect your credit, restore your good standing with creditors,  and make arrangements that work for you and your lender. Don’t lose hope.

The following are the measures you can take to stop student loan garnishment:

  • Settlement
  • Consolidation loan
  • Loan rehabilitation
  • Bankruptcy
  • Voluntary payments
  • Hardship hearing

How can I get my student loan out of garnishment? You can get your student loan out of garnishment by settling your account. A student loan settlement helps you avoid fees that debt collectors charge, which will vary based on the type of student loan you have.

Consolidating your student loans is another way to avoid garnishment of your wages. A Direct Consolidation Loan allows you to convert multiple student loans into one new loan.

Student loan rehabilitation requires you to make 5 payments in addition to your garnished wages to stop your student loan garnishment. Filing for bankruptcy can stop student loan garnishments, but it doesn’t change the fact that your loan is in default.

You can establish a voluntary repayment plan with collectors to stop student loan garnishment. You must continue making payments under the loan repayment terms of your voluntary payment plan.

Requesting a hardship hearing is an option as well. A financial hardship hearing may either reduce or stop your student loan garnishment.

Once your student loan is out of default, you can explore options to pause your repayments or establish a repayment agreement that works for your situation.

Struggling with student loans? Let’s get results.

If you’ve defaulted on your loans, you can take advantage of available options as soon as possible to prevent additional financial risks, such as student loan lawsuits that can add to your debt.

With the help of a qualified student loan attorney, you can prevent or put a stop to garnishment and get on the path to repairing your credit score, restoring your good standing with lenders, and getting out of student loan debt.

You can schedule a free call where we can look at the details and options for your situation. With the right strategy, you can protect your income and work toward a better financial future.

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

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