How to Stop Student Loan Wage Garnishment

February 8, 2021 – By Reyna Gobel

Federal student loan wage garnishment occurs when your employer deducts a portion of your pay to repay your student loan after it defaults. Know that as part of federal Covid-19 relief programs, all federal student loan wage garnishments have stopped until at least Sept. 30, 2021.

There are plenty of ways to prevent wage garnishment before it starts. But once your wages start to be withheld, halting the process gets harder. Generally, to end wage garnishment—by means other than bringing the loan out of default—the garnishment must have been done in error, or you must demonstrate financial hardship.

Still, you may be able to request a stop to wage garnishment, such as if you are making minimum wage and you have no extra money to spare.

Here’s what you need to know about federal student loan wage garnishment.

How Student Loan Wage Garnishment Works

Before your wages can be garnished, you must have missed at least nine months of federal student loan payments, not responded to communication about defaulted loans and then not made arrangements when sent a letter about wage garnishment.

At that point, the U.S. Department of Education can send a notice to your employer to subtract up to 15% of your paycheck, after deductions such as taxes, Social Security and Medicare contributions. The Department will use this money to pay down your loans until they are fully paid off, you’ve been removed from default, an alternate agreement has been made to repay the loan or the Department decides to stop the garnishment for other reasons.

How to Avoid Federal Student Loan Wage Garnishment

Follow the steps below to prevent your loans from going into default, and to stave off wage garnishment before it begins.

Check the Status of All Your Loans

If you took out multiple federal loans, it’s very easy to forget one of them exists—which could mean accidentally not repaying it. This can also happen if you consolidated your loans and didn’t include one or more. You should check the status of all your loans at least once per quarter and make sure they’re in good standing, meaning they’re being repaid on time. Log in to to view your loans.

Quickly Respond to a Notice of Wage Garnishment

The loan holder is required to send a letter to the borrower at least 30 days before wage garnishment begins. Review the letter carefully to make sure there aren’t any errors. You have the right to request proof that you were late on your loans. To do so, respond quickly and ask for copies of letters and documents proving you are a candidate for wage garnishment.

Enroll in a Plan to Get Out of Loan Default

When you bring your loans back into good standing, you will no longer be at risk for wage garnishment. The Education department offers a program where you can make nine consecutive payments based on a percentage of your income, called student loan rehabilitation.

The program is similar to income-driven repayment plans and has a $5 minimum payment for those who qualify. After the payments are complete, the default is removed from your credit report, you can get new student loans when returning to school and your wages will no longer be garnished.

Student loan rehabilitation is considered a voluntary student loan repayment agreement. You can also choose a different repayment option available through the collection agency or the Department of Education. Make sure you make the first payment within 30 days of the date you received the wage garnishment notice and other payments within the time frame stated.

Reasons to Dispute a Wage Garnishment

If you want to dispute your wage garnishment, you can arrange a hearing with your student loan servicer. The reasons you may qualify is if the wage garnishment would create an extreme financial hardship, you were previously involuntarily unemployed (as many were during the Covid-19 crisis) and have been at your new job for fewer than 12 months or you object to the validity of the debt.

What Happens When You Dispute Federal Student Loan Wage Garnishment

Once you file a dispute, you may end up with the garnishment suspended until the hearing is complete and a decision is issued. Your employer cannot fire you or refuse to hire you due to the garnishment.

It doesn’t hurt to file a request, and there are virtually no expenses if the result of your case can be decided by phone or just by providing documents that support the reason you are requesting to stop the default. A more complicated hearing in one of three U.S. Department of Education regional offices in Atlanta, Chicago, or San Francisco may involve travel and legal representation costs.

How Long Do Wage Garnishment Cases Take to Settle?

The case is normally decided within 60 days from the date that the hearing request is received. Possible results of the hearing include wages not being garnished for 12 months, the amount of the garnishment being reduced or the garnishment ending. Ending the garnishment doesn’t mean loan forgiveness. You may end up on a payment plan through the Department of Education. If you are unsuccessful in your hearing, then your wages will resume garnishment at the full rate, up to 15%.

Private Student Loan Wage Garnishment

For wages to be garnished to repay private student loans, you typically have to be sued first, says Madison Block, spokesperson for American Consumer Credit Counseling, a nonprofit credit counseling agency. If you are currently behind on your private student loan payments, it’s best to contact your lender as soon as possible to make arrangements to avoid a lawsuit.

A lawsuit could result in extra fees. If you can’t afford a lawyer, call your local bar association to find local legal clinics that may be able to help you on a sliding scale.

To make sure you don’t lose track of your private student loans, check your credit report on and make sure you recognize all loans listed. Also, check to see if any are shown as delinquent. If the reporting was done in error, you can dispute the error with the credit bureaus.

Where to Get Free Assistance With Wage Garnishment Disputes

Don’t do this alone if you don’t have to. Contact your financial advisor, a credit counselor through a nonprofit credit counseling agency or your local credit union, the Consumer Financial Protection Bureau (CFPB) or your college’s financial aid office for help. They can help advise you on the best wording to use and documents to provide when disputing wage garnishments.

Bottom Line

Student loan wage garnishment is a harsh reality after a loan goes into default. Once the garnishment starts, it could continue until the loan is completely paid off.

There are ways to stop wage garnishment beforehand. Your federal student loan servicer will send you a letter at least 30 days before the garnishment begins. At this time, you may stop the garnishment by proving it was in error or by making an alternate payment arrangement.

With private student loans, you also can try to make payment arrangements or dispute errors. The CFPB offers sample letters for requesting information about the debt and disputing a wage garnishment determination.