Did you graduate from college with both a degree and a mound of student debt? You’re not alone. These days, the majority of students graduate from their post-secondary studies with student loan debt. In 2013, for example, seven out of every 10 students graduated from public and private non-profit colleges with some level of student debt; the average amount of debt (both federal and private loans combined) owed by these students was $28,400.
While many people are able to handle student loan payments after graduation, a number of factors can affect your ability to pay off your student debt. If you’ve been struggling to make your student loan payments, you’re not alone. In 2013, 13.7 percent of borrowers in their third year of student loan repayment defaulted on their loans.
When Does Student Loan Default Occur?
What does it mean to default on your student loan? A default means you’ve failed to repay your loan according to the terms of your promissory note. While the terms of your specific federal loan may vary, for most federal student loans default occurs when you fail to make a payment for more than 270 days. If you’re unsure what constitutes default of your particular federal student loan, check the terms of your promissory note.
What is Student Loan Garnishment?
One of the potential legal consequences of defaulting on your federal student loan is student loan wage garnishment. Wage garnishment means the government withholds money directly from your wages to repay your student loan. Chances are, you defaulted on your student loan in the first place because you were finding it difficult to make your monthly student loan payments; if this is the case, student loan garnishment amounts may decrease your income to the point where you face severe financial hardship.
How To Stop Student Loan Garnishment
If you’re facing garnishment and you’re looking for student loan wage garnishment help, there are, fortunately, a number of steps you can take to stop student loan garnishment of your wages.
Request a Hearing
The garnishment process begins with a Notice of Intent to Garnish. If you request a hearing to challenge the garnishment within 30 days of receiving the Notice of Intent to Garnish, the garnishment process will be put on hold until your hearing. If 30 days have passed, you’ll still be able to make a request for a hearing, but a garnishment order will still be issued and the garnishment of your wages will proceed. If you win your hearing, the garnishment will end.
What are some of the reasons for requesting a hearing to challenge student loan wage garnishment? The most common reason is that the garnishment will impose undue financial hardship on you and your family. The other reasons to request a hearing are usually related to objections to the validity of the claim stated in the notice, which may include the following:
- The loan has already been repaid.
- You are currently participating in a repayment plan for the loan.
- You have filed for bankruptcy.
- Your loan qualifies for student loan forgiveness, cancellation or discharge. There are a number of circumstances in which you may be able to obtain forgiveness, cancellation or discharge, such as the closed school discharge, public service loan forgiveness and the Perkins loan cancellation and discharge, among others.
Student Loan Repayment
You can also stop garnishment of your wages by negotiating repayment terms with the federal government or the private collection agency the government has contracted to. Your garnishment notice will set out a response deadline date of 30 days from the date your notice was sent and your first payment must be received by this date in order to stop the garnishment process.
However, you may still be able to enter into a repayment plan even after garnishment of your wages has begun. If your wages are already being garnished, contact your student loan servicer or provider to see if you can set up a payment plan that’s affordable for you and acceptable to your loan servicer.
Student Loan Rehabilitation
Loan rehabilitation is another option for stopping the wage garnishment process. In order to rehabilitate your loan, you must first come to an agreement with the U.S. Department of Education as to a payment plan that’s both reasonable and affordable for you. You must then make the payments you’ve agreed to in a timely manner, and your loan must also be purchased by a lender. Under this option the garnishment of your wages will continue until the default status has been removed from your defaulted loan.
Student Loan Consolidation
Defaulted loans can be consolidated into a Direct Consolidation Loan. Once your student loans have been consolidated, your old student loans, including the one in default, will be paid off, and you will be left with the consolidated loan as your current loan. In order to include a defaulted loan into a Direct Consolidation Loan, you must either have arranged for a satisfactory repayment plan with the loan servicer for your defaulted loan before consolidation, or you must agree to repay the Direct Consolidation Loan under the Income-Based Repayment Plan, the Pay As You Earn Repayment Plan or the Income Contingent Repayment Plan.
Prevention is the Best Policy
If you’ve been struggling to make your student loan payments, the best time to act is before your loan goes into default. Student loan help is available. There are a number of options for student loan relief which you may be able to pursue if you find yourself unable to make your monthly loan payments, including a different repayment plan (for example, an income-driven repayment plan) or postponement, deferment, forbearance or consolidation of your loan.
If you're in danger of having your wages garnished because of student loan debt, LegalZoom might be able to help. Answer a few simple questions to receive a free evaluation and find out if you qualify for the student loan forgiveness program.