Information on recognizing potential threats of wage garnishment due to unpaid student loans
Federal Student Loan Borrowers Face Wage Garnishment as Pause Ends: Here's What You Need to Know
Millions of student loan borrowers could soon have a portion of their wages garnished as the pandemic-era pause on late payments comes to an end. Here's what you need to do to prevent or resolve this situation.
Check Your Loan Status and Take Action to Remove Default
First, log into StudentAid.gov to confirm if your loans are in default. If so, take immediate action to remove the default status. This can be done through loan rehabilitation or loan consolidation.
- Loan Rehabilitation: Agree to a payment plan with your servicer and make nine or ten consecutive affordable monthly payments. Completing rehabilitation removes default from your credit history.
- Loan Consolidation: Apply for a Direct Consolidation Loan via StudentAid.gov. To qualify, you must either have made three consecutive voluntary payments or agree to repay the consolidation loan under an income-driven repayment (IDR) plan. Consolidation quickly brings loans out of default and halts garnishment.
Respond to Garnishment Notices Quickly
The Department of Education must provide a 30-day notice before initiating wage garnishment. If you receive a garnishment notice, promptly respond. You can:
- Request a hearing to object to garnishment, especially if it causes financial hardship, if you were recently laid off, or if you have submitted applications for discharges like total disability or school closure.
- During the hearing process, garnishment is paused if the objection is timely; after 30 days, hearings may not stop garnishment but can still influence cases.
Enroll in an Income-Driven Repayment Plan
Transitioning to an IDR plan after the pandemic pause and changes in repayment plans (such as ending the Biden-era SAVE Plan zero-interest status) can help manage payments affordably, making default and garnishment less likely.
Stay Informed and Communicate with Your Loan Servicer
Keep in regular contact with your loan servicer or the Department of Education’s Default Resolution Group, especially if you're unsure about your loan status or garnishment processes.
In summary, the best prevention and resolution methods are to confirm loans are not in default, enter rehabilitation or consolidation if they are, promptly respond to garnishment notices, and maintain a manageable repayment plan like an IDR plan.
[1] Borrower Defense to Repayment [2] Public Service Loan Forgiveness [3] Temporary Expanded Unemployment Benefits [4] Student Loan Forgiveness
- In light of the impending end to the federal student loan paymentpause, it's crucial for borrowers to verify their loan status on StudentAid.gov and take steps to remove default, such as loan rehabilitation or consolidation, to avoid wage garnishment.
- If a garnishment notice is received, it's essential to respond promptly by requesting a hearing to object to garnishment, especially when it would cause financial hardship, recent job loss, or while a discharge application like total disability or school closure is pending.
- To manage payments affordably after the pandemic pause, enrolling in an Income-Driven Repayment (IDR) plan is recommended to prevent default and garnishment.
- To stay informed and efficiently resolve any issues related to your student loan, maintain regular communication with your loan servicer or the Department of Education’s Default Resolution Group.
- Learning about options such as Borrower Defense to Repayment, Public Service Loan Forgiveness, Temporary Expanded Unemployment Benefits, and Student Loan Forgiveness can help individuals navigate the complexities of personal-finance and career-development in education-and-self-development contexts, like law or business, in California or Los Angeles.
