How to Stop Wage Garnishment for Student Loans

Federal student loan wage garnishment allows the government to seize a portion of an individual’s earnings to repay defaulted student loan debt. Unlike other debts, federal student loans often permit wage garnishment without a court order, directly impacting a borrower’s paycheck. The Department of Education or a collection agency can withhold up to 15% of disposable pay from wages. Understanding how to stop this action is important for those with defaulted student loans.

Confirming Wage Garnishment and Initial Steps

Borrowers receive a “Notice of Intent to Garnish” at least 30 days before wage garnishment begins. This notice details the debt, explains the right to review loan records, and outlines options to avoid garnishment. Employers also receive a separate order to implement the garnishment. Responding to this notice within the 30-day window can prevent garnishment from starting or temporarily halt it.

First, identify the entity responsible for the garnishment, such as the Department of Education’s Default Resolution Group or a collection agency. Contact this entity or your loan servicer. Gather information including the garnishment amount, frequency, and specific federal student loans involved. Verify the accuracy of the debt detailed in the notice.

Pathways to Stop Garnishment and Required Information

Several pathways exist to stop federal student loan wage garnishment, each requiring specific information and documentation. These options aim to bring the defaulted loan back into good standing or challenge the garnishment directly. The most suitable pathway depends on individual financial circumstances and loan details.

Loan Rehabilitation

One pathway is Loan Rehabilitation, requiring nine voluntary, reasonable, and affordable monthly payments. These payments must be made within 20 days of their due date over 10 consecutive months. The payment amount is calculated as 15% of your discretionary income, though it can be reduced to as little as $5 if you demonstrate financial hardship. Garnishment is suspended after the fifth qualifying payment is made.

Contact your loan holder or servicer to initiate rehabilitation. Provide proof of income, such as recent pay stubs (dated within the last 90 days) or your most recent federal tax return or transcript. If requesting a lower payment due to hardship, provide documentation of household expenses, other income sources like Social Security or public assistance, and child support received.

Loan Consolidation

Another option is Loan Consolidation, combining defaulted federal student loans into a new Direct Consolidation Loan. This immediately removes the loan from default status, stopping wage garnishment. To consolidate a defaulted loan, you must either make three consecutive, on-time payments on the defaulted loan or agree to repay the new Direct Consolidation Loan under an income-driven repayment plan. Provide details of all federal loans you wish to include, along with personal identification and contact information. If opting for an income-driven repayment plan, provide income and family size documentation.

Income-Driven Repayment (IDR) Plan

Enrolling in an Income-Driven Repayment (IDR) Plan establishes affordable monthly payments based on your income and family size, potentially resulting in payments as low as $0. Successfully enrolling in an IDR plan can stop wage garnishment. To apply, provide your Adjusted Gross Income (AGI) from your most recent federal income tax return or a tax transcript.

If your income has recently changed or you do not have a recent tax return, you may submit alternative proof of income, such as pay stubs, bank statements, or a letter from your employer, showing earnings from the last 90 days. Your family size, marital status, and spouse’s income (if applicable) are also required. Once enrolled, you must recertify your income and family size annually to maintain eligibility.

Challenge the Garnishment

You can Challenge the Garnishment if specific grounds apply. Reasons to challenge include identity theft, bankruptcy, total and permanent disability, the loan not being in default, the loan being paid off, or an incorrect amount being garnished. Another ground for challenging is demonstrating that garnishment would cause undue financial hardship.

For each ground, evidence is necessary, such as police reports for identity theft, bankruptcy discharge papers, medical records for disability, or payment receipts for a paid-off loan. If asserting financial hardship, documentation of your income and all monthly expenses will be required. To temporarily halt garnishment while your challenge is reviewed, request a hearing within 30 days of receiving the “Notice of Intent to Garnish”.

Executing Your Chosen Strategy

After gathering information and completing forms, submit your application or request. For IDR plans or Direct Consolidation Loans, the primary submission method is online through StudentAid.gov. You will need your FSA ID to log in and access the relevant applications.

Paper applications for IDR plans and consolidation are also available for download from StudentAid.gov or by contacting your loan servicer. Submit these completed forms, along with any required supporting documentation, by mail or fax to the appropriate entity. For loan rehabilitation, contact your loan holder or the Default Resolution Group directly to establish a rehabilitation agreement. If you are challenging a garnishment, the Notice of Intent to Garnish will provide specific instructions for requesting a hearing.

When submitting online, ensure that all sections of the application are accurately filled out and all required supporting documents, such as tax returns, pay stubs, or expense proofs, are properly attached and uploaded. Keep copies of all submitted forms and supporting documentation for your personal records. After submission, you should receive a confirmation of receipt, often via email or letter.

Processing timelines can vary depending on the chosen strategy; IDR applications typically process within approximately four weeks. Consolidation applications begin processing as soon as completed forms are received. For rehabilitation, a formal agreement outlining your calculated monthly payment should be sent within 10 business days after your income and expense information is received. During these processes, the loan servicer or the Department of Education may contact you with questions or to request additional information. Maintaining proactive communication with your loan servicer or the garnishing entity is important to ensure your request is processed efficiently and any potential issues are addressed promptly.