$show=post

Popular Categories$show=/search/label/Labels

$show=post

How Student Loan Default Can Gut Your Paycheck

© Getty Images Default on your federal student loans and the government could take up to 15 percent of each paycheck to satisfy your debt.

By Kelsey Sheehy, NerdWallet

There’s a dirty little secret of the student debt crisis. One that affects millions of borrowers, but isn’t talked about at dinner tables, on social media or in think pieces about student loans.

The taboo topic is wage garnishment and it works like this: Default on your federal student loans and the government can take up to 15% of each paycheck to satisfy your debt. That amounts to $300 per month for someone who normally takes home $2,000 per month. The Education Department can also withhold federal benefits like tax refunds and Social Security payments.

Garnishment is an effective tool to recoup unpaid loans — private collection agencies enlisted by the Education Department took in over $841.6 million via wage garnishment in the 2018 fiscal year — but it inflicts serious financial strain on borrowers who are already struggling.

“It’s a very powerful collection tactic that can really devastate the financial lives of the people subjected to it,” says Joanna Darcus, a staff attorney at the National Consumer Law Center who works with low-income student loan borrowers. “They can’t afford to pay their rent, buy their medicine, buy clothes for their kids and also pay a large percentage of their wages toward their student loan.”

If you received notice of garnishment or are already in the thick of it, don’t panic; you have options that are far less painful than a 15% hit to your paycheck.


Stop garnishment before it starts

The ideal time to take action is when you begin struggling to make payments. At that point, your loan servicer can help you explore other repayment options, including income-based plans that cap your monthly payment.

Once your loans are in default — nearly nine months past due for most federal loans — those options are off the table until your loan is in good standing. You can rehabilitate your loans to move out of default (more on that below). You also have a brief window to consolidate your federal loans (combining them into a single loan with its own interest rate) before the Education Department, via a private collection agency, moves to garnish your wages.

The collection agency handling your federal loans will notify you by mail before it starts garnishing your wages. The notice serves as your 30-day warning. During this time, you can stop the process by negotiating payment arrangements with the agency. The key: It must receive your first payment in that 30-day window.

If you can’t make a payment within that window, request a hearing to appeal the garnishment. To prevent garnishment from starting, you must request the hearing in writing within 30 days of the date on your collection notice. You can still file an appeal after garnishment starts, but the collection agency will continue to take up to 15% of your take-home pay while the case is reviewed, which can take two to three months.

A hearing sounds intimidating but it’s no more than a long form detailing your income, debt and expenses. The goal is to stop or reduce garnishment.

“You hear the word ‘hearing’ and think, ‘Oh my god, I need an attorney!’ But it’s just a basic exchange of information,” says Betsy Mayotte, founder of The Institute of Student Loan Advisors.

Contact the collection agency handling your loan to talk about payment arrangements or get details on a hearing request. Not sure whom to call? Check the National Student Loan Data System to find out who is managing your loan and how to reach them.


Rehabilitate your loan

Loan rehabilitation is a one-time “Get out of default” card. Here’s how it works:

The collection agency sets a monthly payment based on your income, minus any reasonable monthly expenses. The amount could be as low as $5 a month.

You’ll need to provide documentation, like copies of pay stubs and bills, and complete a detailed form to help determine the amount. Any wages garnished due to defaulted student loans will be considered among your expenses.

Make nine payments of the agreed-upon amount within 10 months and your loans move out of default. Any wage garnishment will stop. And you’re once again able to choose a repayment plan that works for you, including several income-based options that could drop your monthly payment to $0.

Once out of default, take care to stay out. Make your payments each month. Recertify your income every year if you’re on an income-based plan. And call your loan servicer if you run into trouble. If you default a second time, you’ll have fewer options.

COMMENTS



|Featured Content_$type=three$c=6$l=0$m=0$s=hide$rm=0


Made with in NYC
Name

4th of July,7,Abu Dhabi,2,Accessories,234,Acne,13,Adventure,32,Adventure Travel,638,Advice,295,Africa,26,African Food,2,AIDS,1,Air Travel,150,Alabama,5,Alaska,20,Alberta,1,Alcohol,4,All About Beer,1,All About Wine,2,Alternative Treatments,4,America,77,American Food,5,Amsterdam,2,Android,11,Anguilla,3,Animal,367,Animal Health,1,Animals,103,Anniversary,1,Anniversary Cake,11,Antarctica,7,Anti-aging,49,Antigua,3,Appetizers & Snacks,2,Apple,11,Apps,16,Argentina,15,Arizona,19,Arkansas,2,Armenia,1,Asia Travel,47,Asian Food,7,Asthma,4,Athens,3,Austin,8,Australia,92,Australian Food,1,Austria,13,Autism,1,Auto Insurance,1,Auto Show,52,Autos,46,Azerbaijan,1,Baby Shower Cake,29,Back Pain,25,Bags,10,Bahamas,13,Balance Work & Life,50,Banana Cakes,2,Bangladesh,8,Barn Finds,1,Bathroom,43,Be a Better Manager,33,Beach Travel,58,Beaded Dress,2,Beards and Shaving,29,Beauty,1888,Beauty & Style,35,Beef Recipes,7,Belarus,1,Belgium,9,Belize,15,Bermuda,5,Best Products,17,Better Partner,40,Beverages,3,Bhutan,9,Bills to Pay,35,Birds,4,Birth Control,1,Birthday Cake,109,Blue Lagoon,2,Blueberry Cake,11,Bolivia,3,Botswana,3,Brazil,38,Bread,11,Breads,1,Break Room,12,Breakfast & Brunch,6,Breakup,19,Breakups,3,breast,1,Breasts,69,Broken Hearts,5,Brownie,8,Brunei,1,Budget Travel,97,Bundt Cake,30,Business Skills,103,Butter Cake,52,Buying,1,By Region,3,Cake Decorating,113,Cakes,54,California,109,Cambodia,4,Camera,6,Canada,80,Cancer,73,Car Shows,1,Car Tech,2,Caramel Cake,5,Career,231,Career Advice,298,Career Choice,125,Career Growth,180,Career Paths,24,Career Problem,8,Caribbean,45,Caribbean & Mexico,5,Carrot Cake,22,Cats,49,Celebrity,17,Celebrity Dress,2,Celebs,1,Ceremonial Cake,9,Certified Pre-Owned Vehicles,1,Cheese Recipes,4,Cheesecakes,251,Chicago,7,Chicago Auto Show,2,Chicken Recipes,14,Chiffon Cake,5,Children's Health,21,Chile,7,China,21,Chocolate Cake,395,Christmas,35,Christmas Cake,23,Christmas Travel,14,Classic Cars,39,Cleaning Tips,144,Clinical Practice,1,Clothes,1,Cocktail Recipes,2,Coconut Cake,21,Coffee,1,Coffee Cake,15,Coliseum,1,Colombia,18,Colorado,32,Columbia,3,Communication,2,Companies,2,Compassion,2,Computing,16,Connecticut,4,Consumer Electronics Show,5,Cookies,10,Cooking,8,Corporate Travel,2,Costa Rica,13,Country Travel,249,Creative,309,Creative Idea,22,Creative Ideas,37,Croatia,15,Cruiser Travel,16,Cuba,18,Cultural Travel,66,Cupcake,322,Customs & Classics,2,Czech Republic,6,D.C.,2,Dandruff,1,Dating,18,Dating Advice,73,Dating Advice for Women,22,Dating Tips,13,Decor,23,Decorating Ideas,181,Delaware,1,Demotivational,636,Denmark,12,Dental Health,26,Dentistry,1,Depression,24,Desert Travel,1,Desserts,3,Detroit Auto Show,4,Diabetes,25,Diet,131,Dining Out,3,Dinner,14,Disease,116,Diverse,1,Divorce,16,DIY,112,DIY Fashion,34,Dogs,156,Doughnuts,5,Dress,29,Drink,27,Drinks,1,Drinks & Cocktails,4,Driving,3,Drugs,3,Dubai,15,Ears,2,East Africa,4,Easter,1,Easter Island,1,Easter Travel,1,Eco Travel,18,Ecuador,7,Education,88,Eggs,3,Egypt,4,Electronics,4,Electronics and Gadgets,2,Emirates,1,England,13,Entertainment,148,Enthusiasts,131,Entrepreneurship,40,Estonia,2,Eswatini,1,Ethiopia,2,Europe,110,European Food,8,Exercises,51,Eye,300,Eye Health,28,Eyebrow,56,Eyelash,20,Face,54,Facts,284,Fall Travel,43,Family,16,Family Travel,128,Faroe Island,1,Fashion,395,Fashion for Kids,2,Fashion for Man,12,Fashion for Woman,31,Fat Loss,91,Father's Day Cake,4,Father's Day Travel,1,Featured,218,Features,1913,Fertility,2,Festival Travel,25,Fiji,6,Finance,8,Finland,16,Fish & Seafood,13,Fitness,1178,Fitness & Exercise,219,Florida,69,Food,141,Food and Drink,14,Food Recipes,7,France,37,Frankfurt Motor Show,2,Free Travel,3,French,6,French Polynesia,5,Friendship,40,Fruit & Veggie Recipes,8,Fruitcake,70,Fruits,4,Fuel Economy,1,Fun,42,Funny,546,Gadgets,31,Galapagos,3,Games,13,Garden,24,Gardening,276,Gearheads,1,General,7,Geneva Motor Show,3,Georgia,14,Germany,18,Get Healthy,63,Ghana,2,Girlfriend Grooming,10,Google,15,Graduation Cake,2,Gratitude,11,Greece,37,Green Living,5,Greenland,1,Grooming,89,Guatemala,2,Hair,1264,Hair Care,317,Hair Color,299,Hairstyle,65,Hairstyles,855,Halloween,41,Halloween Cake,12,Halloween Travel,9,Happiness,19,Hawaii,53,Hayden Panettiere,1,Headache,22,Health,1738,Health & Fitness,300,Health Care,491,Health Insurance,1,Healthcare Tech,6,Healthy,12,Healthy Drinks,31,Healthy Eating,186,Healthy Habits,159,Healthy Living,345,Hearing,1,Hiking Travel,63,HIV/AIDS,4,Holiday Travel,28,Holland,1,home,31,Home & Garden,205,Home and Decor,484,Honeymoon Travel,128,Hong Kong,13,Horoscope,31,Hot Rod Power Tour,1,Hotels,71,Housekeeper,8,Hungary,3,Ice cream Cake,21,Iceland,41,Idaho,4,Ideas,11,Illinois,13,Imports,1,Impress a Girl,20,Impress Women,4,Independence Day Travel,1,India,36,Indiana,5,Indonesia,13,Indoor Gardening,69,Industry,5,Inspiration,58,Insurance,5,Internet,19,Internship,8,Interview Skills,37,Investing,12,iPad,2,iPhone,6,Iraq,1,Ireland,36,Island,60,islands,2,Israel,9,Italy,56,Jamaica,8,Japan,44,Jealousy,2,Jewelry,13,Job Search,47,Jordan,6,Just For Fun,2,Kansas,6,Kentucky,2,Kenya,2,Kids & Pets,10,Kitchen,67,Koala,1,Korea,2,Kyrgyzstan,1,Labels,1,Lamb,2,Laptops,4,Latin America,3,Latin American Food,1,Latvia,1,Laundry,6,Layer Cake,95,Leadership,44,Legs,1,Lemon Cake,18,Life,1,Life Hacks,277,Lifestyle,1580,Lips,134,Lithuania,2,London,24,Long Distance Relationship,24,Los Angeles Auto Show,14,Louisiana,9,Love,165,Lowa,4,Lunch,5,Luxembourg,1,Luxury Travel,35,Maine,6,Maintenance,3,Makeup,608,Makeup & Beauty,11,Makeup Tips,77,Malaysia,1,Maldives,15,Malta,2,Mango Cake,3,Manicure,10,Marketing,10,Markets,11,Marriage,97,Marshmallow,3,Maryland,6,Massachusetts,9,Massage,5,Mauritius,6,Meditation,35,Men & Women,18,Men's,5,Men's Health,14,Menstruation,21,Mental Health,302,Mexico,74,Miami,13,Michigan,5,Microsoft,6,Middle Eastern Food,2,Mind,3,Mississippi,2,Missouri,7,Mobile,22,Moldova,1,Monaco,1,Money & Career,21,Monkey,1,Montana,12,Morocco,20,Mother's Day Travel,1,Motherhood,16,Motivation,2,Motorcycles,106,Motorsports,2,Mousse,2,Muffins,9,Mug Cake,14,Multiple Sclerosis,1,Muscle Cars,4,Muscle Cars & Hot Rods,3,Muscle Gain,2,Myanmar,9,Nail Art,195,Nails,252,Namibia,4,Nature,4,Nature Travel,102,Nepal,6,Netherlands,11,Nevada,23,Nevis,1,New Bikes,2,New Car Deals,1,New England,5,New Jersey,2,New Mexico,6,New Year Fashion,6,New Year's Day Travel,6,New York,55,New York Auto Show,3,New York City,20,New Zealand,47,Newfoundland,1,Newlyweds,4,News,334,Nicaragua,2,North America,11,North Carolina,6,North Dakota,1,North Ireland,1,Northern Ireland,1,Norway,20,Nutrition,447,Occasional Travel,9,Oceania,1,Offbeat,564,Ohio,6,Oman,5,Online Date Tips,2,Operating Systems,2,Oral,4,Oregon,10,outdoor,3,Outfits,166,Ownership,61,Pain,24,Painting,16,Pakistan,2,Panama,5,Pancake,19,Panda,1,Panna Cotta,3,Paraguay,1,Parenting,371,Paris,23,Paris Motor Show,4,Pasta,2,Pastry,7,Pebble Beach Concours d'Elegance,2,Pedicure,4,Penguin,4,Pennsylvania,10,People & Places,88,Perfumes,14,Personal Finance,164,Peru,21,Pets,209,Phoenix,1,Photo Feature,1,Pie,27,Pimple,3,Plum Cake,1,Poke Cake,10,Poland,3,Popular Ingredients,26,Pork Recipes,7,Portable Media,14,Portugal,21,Pound Cake,55,Prague,1,Pregnancy,112,Premium,1,Printer,2,Protein Bars,1,Psychology,1,Pudding,9,Puerto Rico,7,Pumpkin Cake,45,Qatar,6,Quick & Easy Recipes,11,Real Estate,72,Recalls,4,Recipe,1098,Recipes,52,Recipes & Meal Ideas,3,Recipes By Course,5,Relationship,167,Relationship Advice,180,Relationship Advice for Men,23,Relationship Advice for Women,27,Relationship Problems,58,Relationship Secrets,14,Relationships,185,Research,94,Resort,11,Restaurants & News,13,Resume,11,Retirement,10,Reviews,1,Rhode Island,2,River Travel,2,Road Trips,49,Romania,4,Romantic Getaways,15,Rome,5,Russia,16,Safety,5,Saint Lucia,1,Saint Patrick's Day Travel,1,Salad,6,San Miguel de Allende,1,Science & Tech,66,Scotland,10,Seasonal,56,Seasonal Travel,59,Security,9,Self Help,14,Self-Care,3,SEMA Show,5,Senior Relationship,2,Sex,7,Sexual Health,19,Shanghai Auto Show,7,Shaving,1,Sheet Cake,20,Shirt,4,Shoes,29,Shopping,10,Shots & Shooters,1,Side Dishes,4,Sightseeing Tours,2,Singapore,18,Ski Resorts,10,Skin,429,Skin Caare,1,Skin Care,609,Sleep,62,Slovenia,6,Small Business,164,Smartphone,28,Smile,1,Smoothies & Juices,3,Snacks,1,Social Media,44,Solo Travel,24,Solomon Islands,1,Somoa,1,Soth Africa,1,South Africa,14,South America,3,South Carolina,4,South Dakota,5,South Korea,3,South Pacific,2,Space Travel,14,Spain,33,Special,46,Special Cake,579,Special Feature,113,Special Features,490,Sponge Cake,15,Sports,22,Sports and Exotics,4,Sports Cars,8,Spring Travel,23,Squirrel,1,Sri Lanka,6,Strawberry Cake,22,Street Fashion,8,Stress Relief,35,Stroke,2,Student Travel,1,Style Guide,25,Summer Travel,53,Summer Vacation,8,Supercars,10,Sweden,19,Swiss Alps,1,Switzerland,20,Tahiti,1,Taiwan,3,Tanzania,1,Tarts,12,Tattoos,82,Taxes,7,Teas,2,Tech,89,Tech Advice,12,Tech Education,7,Tech Hacks,19,Tech Updates,2,Technology,19,Teen Advice,4,Teeth,5,Tennessee,6,Texas,57,Thailand,31,Thanksgiving Cake,4,Thanksgiving Travel,5,Therapy,3,Things to Do,165,Tibet,2,Tips,264,Tips & Tricks,6,Tokyo Motor Show,2,Tools & Skills,16,Top Stocks,1,Top Stories,1,Traditional Cake,4,Train Travel,23,Training,1,Transportation,22,Travel,1043,Travel Advice,64,Travel Apps,1,Travel Guide,40,Travel Tips,149,Trends,7,Trucks,1,True Health,5,Tunisia,2,Turkey,10,Turkish,1,Tuscany,1,TV,2,UAE,10,UK,40,Ukrine,1,Understanding Women,28,Urban Travel,47,Uruguary,1,USA,629,Utah,12,Uzbekistan,1,Vacation Travel,245,Valentine's Day Cake,7,Valentine's Day Travel,1,Vanilla Cake,17,Vegetables,3,Vehicle Travel,2,Venezuela,1,Vermont,4,Victoria Falls,1,Video,5,Vietnam,5,Virginia,5,Waffles,3,Washington,15,Washington DC,20,Waxing,19,Web & Social,17,Wedding,87,Wedding Cake,549,Wedding Dress,30,Weddings,60,Weddings Travel,4,wei,1,Weight Gain,29,Weight Loss,755,Weird,172,Wellness,193,West Indies,2,Wi-Fi,2,Wildlife Travel,13,Winter Travel,56,Wisconsin,5,Women Lifestyle,23,Women's,689,Women's Health,173,Work Environment,77,Workout,8,Workouts,81,Worldwide,155,Wyoming,2,xxx,1,Yemen,1,Yoga,85,YouTube,3,Zadar,2,Zambia,3,Zimbabwe,4,
ltr
item
dearJulius.com: How Student Loan Default Can Gut Your Paycheck
How Student Loan Default Can Gut Your Paycheck
https://4.bp.blogspot.com/-DAq7g5TMusU/XGJwR_3k-qI/AAAAAAAAL7o/mfVGI35AfrkBST6zfSJjTMFUBbUfAyxZwCLcBGAs/s1600/How%2BStudent%2BLoan%2BDefault%2BCan%2BGut%2BYour%2BPaycheck.jpg
https://4.bp.blogspot.com/-DAq7g5TMusU/XGJwR_3k-qI/AAAAAAAAL7o/mfVGI35AfrkBST6zfSJjTMFUBbUfAyxZwCLcBGAs/s72-c/How%2BStudent%2BLoan%2BDefault%2BCan%2BGut%2BYour%2BPaycheck.jpg
dearJulius.com
https://www.dearjulius.com/2019/02/how-student-loan-default-can-gut-your.html
https://www.dearjulius.com/
https://www.dearjulius.com/
https://www.dearjulius.com/2019/02/how-student-loan-default-can-gut-your.html
true
673833072858841524
UTF-8
Loaded All Posts Not found any posts VIEW ALL Read More Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy