Millions of Student Loan Borrowers Face Wage Garnishment
Millions of student loan borrowers face potential wage garnishment by the federal government, with the Department of Education announcing in May that tax refunds and wages could be withheld starting this summer. Borrowers in default risk having 15% of their pay docked, with the process typically beginning after 270 days of missed payments.
Nearly one in three student loan borrowers were at risk of defaulting on payments by July, highlighting the potential scale of the issue. Borrowers can remove their loans from default by entering a rehabilitation agreement or consolidating their loans, but it's still unclear exactly when wage garnishment will begin.
Borrowers can request a hearing to object to wage garnishment if it would cause financial hardship. The Department of Education must provide 30 days notice before sending a garnishment order to an employer. Borrowers may have to prioritize which bills to pay to avoid this situation.
With millions of delinquent student loan borrowers at risk, the potential impact of wage garnishment is significant. Borrowers are advised to stay informed about their loan status and explore options to avoid default, such as rehabilitation agreements or loan consolidation.
