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Preparing for Wage Garnishment on Federal Student Loans Post-Pandemic Pause
Millions of student borrowers could face wage garnishment as early as this summer, according to estimates from credit bureau TransUnion. To help navigate this challenging situation, it's crucial for borrowers to be well-informed and proactive. Here's what you need to know.
Stay Informed and Respond Promptly
The Department of Education will send a 30-day notice before garnishment begins, giving you time to act. It's essential to stay informed about your loan status and respond promptly to any garnishment warnings.
Understand the Impact
The government can garnish up to 15% of your disposable income without a court order. However, the law requires that you keep at least $217.50 per week after garnishment, and if you earn less, less or no garnishment may happen.
Request a Hearing
If you receive a garnishment notice, request a hearing within 30 days. This can delay the garnishment while your case is reviewed, especially if you argue financial hardship or eligibility for discharge.
Explore Options
- Arguing financial hardship to reduce or stop garnishment temporarily.
- Claiming discharge eligibility—like school closure, disability, bankruptcy—that can stop garnishment.
- If unemployed or recently laid off, you might qualify to pause garnishment if you have not been in your current job for 12 months.
Seek Assistance
If you're unsure about your options, seek help from student loan advisors, nonprofit legal groups, or the U.S. Department of Education for guidance tailored to your situation.
Contact Your Representatives
If you need assistance, don't hesitate to contact your congressional representatives. They can help with constituent issues regarding federal student loans.
Monitor Your Credit
Since the end of the Biden-administration grace period, millions of borrowers have seen hits to their credit ratings, and another 2 million are predicted to default in September. Monitoring your credit and addressing any issues promptly can help you maintain financial health.
Case Studies
Richelle Brooks, an education administrator, has $239,000 in outstanding student debt and faces monthly payments of approximately $3,000. Brooks plans to enroll in coding classes to place her loans in deferment.
In summary, being proactive by monitoring communications, requesting hearings promptly upon garnishment notice, and exploring hardship or discharge options are critical to preparing for and mitigating wage garnishment on federal student loans after the repayment pause ends.
- The upcoming resumption of student loan repayments may lead to wage garnishment for millions, so it's vital for borrowers to stay informed about their loan status.
- If faced with a garnishment notice, borrowers should promptly respond and request a hearing within 30 days to delay the action and present their case.
- Eligibility for discharge, such as due to school closure, disability, or bankruptcy, can halt garnishment, as can temporary reduction or halt based on financial hardship.
- During periods of unemployment or recent layoffs, borrowers might qualify for a pause on garnishment if they've not been in their current job for 12 months.
- Seeking guidance from student loan advisors, nonprofit legal groups, or the U.S. Department of Education is recommended for personalized advice on garnishment situations.
- As millions face credit rating hits following the end of the repayment pause grace period, it's essential to monitor credit and address issues promptly for financial health maintenance.
